The pound advanced on UK Prime Minister survive the confidence vote, easing trade tensions help the EM currencies to rebound, the dollar slipped but Treasuries rebounded; Palladium at a record high; Market wrap

The pound rose between 1.00-1.60% recorded the biggest intraday gain in a month as the market prepares for May’s survive on a confidence vote.
Just in: UK’s May wins the party confidence vote, post the news pound narrowed gains slightly but still holding significant intraday gains.  As we noted yesterday, more clarity on Brexit means a big squeeze (not in a straight line though). What we saw on Wednesday is a trailer, to us.

  • In the EM currency space, South Africa Rand up by 1.50% and currently trading at 14.10 whereas Lira firmed at 5.35.
  • Turning to G10 currencies GBP surged more than a percent followed by EUR and DKK 0.55% each. Besides NZD lost 0.40%.
  • The dollar index rejected again at the supply zone 97.40-97.50 and traced out a triple top formation; closed at 96.95. But the yield on 10-year Treasuries closed at 2.91 up from Wednesday’s 2.89
  • Now my interesting space to trade lies on commodities where we saw massive gains overnight with Platinum 2.5% followed by Palladium 1.70% at fresh high and Silver with 1.50%. Besides gold advanced only 0.2% remains below 200MA.
  • Finally, cryptos Bitcoin and Ripple rallied more than 2.00%. Both the digital currencies manage to hold the 200MA (Weekly) so far, but the rallies are uncertain.

What’s on today?

The Swiss National Bank Monetary policy and ECB monetary policy decision will be published today. We expect both the central banks’ main policy rates to remain unchanged.

Goldman Sachs says, “we expect (1) the SNB to leave the target range for the three-month Libor unchanged, at between -1.25% and -0.25%; (2) maintain the interest rate on sight deposits with the SNB at -0.75%; and (3) resort to occasional foreign exchange market interventions to deal with short-term appreciation pressures on the Swiss Franc as is deemed necessary.”

The bank also said, “we pushed back the first expected policy rate rise for the Swiss National Bank to Q1 2020, from Q4 2019 previously.”.

Our main focus remains on the December ECB meeting (Thu). We and the market expect the ECB to leave its key policy rates on Hold. After a series of weak macroeconomic data across EA, we also assume that the meeting could be on a dovish tone.

Chart of the day: EURCHF
As long as 1.1220/1.1180 is support look for 1.1350 and 1.1450. Intraday support finds at 1.1260/1.1250, 1.1220 and 1.1180.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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