Brexit weighs on the British pound, euro. Yen spikes and falls back. Bill Baruch, president and founder of Blue Line Futures, reviews and previews the euro, Japanese yen, Chinese yuan, Aussie and Canadian and the upcoming economic calendar.
Euro (December)
Session close: Settled at 1.13585, down 71 ticks.
Fundamentals: In the UK, Prime Minister May’s Brexit deal was pulled from a Parliamentary vote scheduled for Tuesday. Pressure is building for the UK to solidify framework to exit the EU as the March deadline nears. The outlook right now looks as uncertain as ever and the British pound (GPB/USD) lost 2 cents today to trade at the lowest level since April 2017.
While this is weighing on the euro (EUR/USD) the currency is finding additional pressures as the clock is running near midnight for Italy to respond with the appropriate changes to its budget in order to avoid disciplinary action. Now, France is also in the European Commission’s crosshairs after French president promised to cut taxes and raise the minimum wage at the turn of the year in response to rioting. Although weaker than expected jobs and wage data from the U.S weakened the dollar Friday, uncertainty in Europe and on international trade has reinvigorated its safe-haven winds.
Tomorrow, we look to the closely watched German ZEW Sentiment due at 5:00 am EDT along with the Eurozone read and Current Conditions. From the U.S PPI data is due at 8:30 am EDT but it’s the CPI read on Wednesday that will be much more noteworthy. The ECB holds their policy meeting on Thursday and the sentiment data could have a greater impact in anticipation of such. For the Fed, they entered their quiet period ahead of next week’s policy meeting. Since last Monday, the probability of a hike has fallen from 84% to 73%.
Technicals: The euro traded to a high of 1.1449 before failing, this was the top-end of a channel formation. Price action now faces the bottom-end, first minor support tomorrow at ...
Yen (December)
Session close: Settled at .88375, down 45.5 ticks.
Fundamentals: The yen (JPY/USD) spiked out of the gate last night with turmoil hitting equity markets, Friday’s U.S. jobs miss and bad data over the weekend from China. The high reached at 9:00 pm EDT was all she wrote though. The yen finished nearly a point from the session high and saw pressure with the dollar gaining safe-haven strength and U.S. benchmarks finishing more than 2% from their session lows. Last night, GDP data from Japan missed. Tonight, we look to BSI Large Manufacturing data at 6:50 pm EDT, given the international trade conflict, this is a closely watched number. Also, there is a 30-year JGB auction at 10:35 pm EDT.
Technicals: The path of least resistance is again lower for the yen after it failed for the third time at first key resistance at ...
Aussie (December)
Session close: Settled at .7187, down 23 ticks.
Fundamentals: After spiking higher on the open last Sunday, the Aussie has traded directly lower (AUD/USD) just as equity markets, however, today’s second-half recovery in equities was failed to be seen in the Aussie. The recovery in stocks was also failed to be seen in commodities as energies and metals all finished much lower on the session. The global risk appetite is one of uncertainty and the Aussie finds itself right in the middle with it acting as a pulse to the U.S. and China tensions. A miss on Chinese inflation and trade data sent the currency to one-month lows last night. Tonight, we look to House Price Index and NAB Business Confidence from Australia at 7:30 pm EDT.
Technicals: Price action has slipped by 2.7% from its highs one week ago. Although the trade has been directionally lower, the Aussie is testing major three-star support head-on at ...
Canadian (December)
Session close: Settled at .7457, down 72.5 ticks.
Fundamentals: A massive gain in jobs (94,100 versus 10,300 expected) and a lower Unemployment Rate ripped the Canadian on Friday more than a penny from its low last week, but the excitement dissipated almost as quickly as it came; all of the gains from jobs and more are now gone. Even a strong read on Housing Starts this morning could not get the ball rolling.
Furthermore, with Crude Oil losing 1.5% on the session and the products getting crushed, the Canadian did not participate in the bounce that equity markets had in the second half of the day. Overall, international trade and the Brexit have brought continued uncertainty to the Canadian while reinvigorating the U.S. dollar’s safe-haven winds.
Technicals: The Canadian is at the lowest level since last June and the tape looks bleak. A continued close below .7485-.7500 will encourage a path of least resistance to ....
