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The market was focused on any news that filtered through regarding the Senate Tax reform yesterday, there were rumours circulating for the majority of the day. The most concerning rumour to investors anyways was that the much touted corporate tax cut would be delayed into 2019 – this rumour actually did turn out to be accurate and was not well received. The US equity markets started posting losses, but it wasn’t long before this relentless beast started finding buyers and these markets bounced – this just reiterates for me why I have decided to sit these instruments out for now.
The greenback enjoyed a mixed day yesterday as the pair managed to pair the losses before rebounding again today. I suspect that there may be some form of dollar rally this morning, the moves may then be slightly exaggerated this afternoon as a dollar holiday will bring with it some reduced liquidity.
The EURUSD traded higher yesterday as it moved towards resistance at 1.1661 before running out of steam at 1.1655. This remains the level to watch this morning as sellers started building some offers around here, for the bears the key level to watch today is 1.1620. This level represents the 200 hour MA and a break below here will see the bears take some control.
Cable has rotated between 1.3166 and 1.3140 for the most part of this week, and the 100 hour MA at 1.3167 has failed three times this week. 1.3102 is the key level to watch on the lower side and this level has seen some action both above and below – this tells me that traders are uncertain as to the next move in this pair. I believe that this uncertainty remains and so I will rather look for opportunity elsewhere.
In the Zone
Important Economic Data out today
11:30 GBP Manufacturing Production
Effect: Higher than expected is good for the USD
All Day USD Bank Holiday
- The Senate leaked some rumours regarding the tax reform, I will only believe it when I see tweets from Donald Trump. The current format does not look encouraging for the middle class though and I suspect that the market will be disappointed.