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In the Zone
- Rumours are starting to surface that the Conservative Party are calling for PM May to resign, oddly enough it is becoming apparent that the Brexit negotiations will be a lot smoother without the current PM involved – one to keep an eye on.
The market had braced itself for some major comments out of the G20 meetings, in particular talks with Trump and Putin but there was nothing too much to filter through. We saw comments from Senator McCain hinting that there will not be any new Healthcare Bill getting through the Senate, the FX markets have not reacted thus far this morning and I am wondering if traders are getting a little bit tired of the drivel that is coming from both politicians and central bankers – I hope so.
Angela Merkel was keen to announce the weekend as a success and pointed out single pledges on trade, finance, energy and Africa as the major success stories. The issue is that a climate pledge without the US or any pledge whatsoever without the support of the world’s largest economy is doomed for failure, and I suspect that Trump knows this. The truth is that this weekend was dominated by the Trump – Putin meeting and the fact that the US are going to start raising the heat on China over the North Korea debacle, the suggested punitive trade measures on the steel industry could have a material impact on the Chinese economy.
This morning has started in a very low key manner, the only thing worth reporting is a speech from BOJ Governor Kuroda that indicated continued QE until at least the inflation landscape shows signs of improvement. This led the USDJPY to test last week’s highs at 114.25 where price currently sits, Japan are trying everything they can to keep the JPY weak, but I suspect that they have now used all their tools. There is divergence forming on the 4H chart and it seems as though momentum is fading on the Daily chart, the bulls will want to see a close above 114.50 whilst the bears will want to see a close below 113.45. Today could be pivotal in this pair.
The rest of the pairs have been rather subdued this morning and with a lack of any major economic data on the agenda it may continue to be so. The dollar index looks as though it is poised to make some form of recovery this week, and the Fed Chair Yellen testimony on Wednesday and Thursday may be the catalyst for this to materialise.
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