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Market Insight Commentary – Forex
Today's News Headlines
- It is being reported that Senators will try and get a stopgap bill through today to avoid a government shutdown. I find it odd that it is the Democrats that are voting against it, considering it is them and former leader Obama that have effectively put the US in this position.
Market Insight Commentary – Indices
Market Recap
The big question on the lips of most traders yesterday was whether the greenback was going to be able to continue its recent recovery from Wednesday evening. The dollar was showing some signs of weakness yesterday morning and by time New York opened, it was slightly weaker and the flood gates only opened then to make the dollar the worst performing major currency on the day. We did highlight this yesterday morning, the cause of the dollar rally late on Wednesday night was more around the Beige book – this is not normally a market mover – and so we were concerned that Wednesdays move was a knee jerk reaction.
There is perhaps some event risk causing the present trend, with once again a potential for a government shut down today. As usual the focus will be on ways to avoid a shut down, and there always seems to be a solution. I have often been critical of Donald Trump but this has nothing to do with him, this is more about the really poor leadership of his predecessor Obama. We have seen rumblings around the Senate that the debt ceiling cannot be raised again – and they are right – I just can’t see how they are going to solve this situation with raising it.
The EURUSD has been a real flirt this week and has presented opportunity for both the bulls and the bears this week. The pair reached a low of 1.2166 yesterday and bounced as high as 1.2260 before we found some resistance, this is a key hurdle today as the bulls will try and wrestle control. We have major resistance levels in play at 1.2282, 1.2300 and 1.2325 which could all be in play this morning, these would also represent the highest level in almost 4 years. The first level of support is at 1.2200 now and so I have decided to sit this pair out for today as these highlighted pairs could be on the cards.
Cable remains in the range on Wednesday which may have lulled the over eager into shorting the pair early, what we saw yesterday is the pair move through major resistance. The pair traded as high as 1.3950 which is the highest since Brexit in 2015, the 100 hour MA is trading at 1.3800 and this will be the major support level to break if the sellers want to gain anything, but for now the buyers are still very much in control. It seems strange to me that the GBPUSD is so incredibly strong considering it still faces the real threat of Brexit – but it is also hard to ignore the technicals.
I continue to sit on the fence, these moves in my mind are illogical and will reverse at some point. With Davos on the agenda next week, our patience levels will be tested to the limit – but I feel safe in the knowledge that my patience will ultimately be rewarded.
Important Economic Data Due Today
11:30 GBP Retail Sales
Consensus: -0.8%
Effect: Actual higher than consensus is good for the GBP
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