Daily Commentary | 11/02/2019
USD remains stable, worries linger on
The USD remained rather stable against a number of its counterparts despite trade and global growth worries are pushing in the safety of the greenback. Analysts point out that US-Sino trade talks are expected to be the major focus for the coming week, as US negotiators are to visit China. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. We could see the USD gaining further should uncertainty about the issue linger on. EUR/USD dropped on Friday and during today’s Asian session, testing the 1.1345 (R1) resistance line, yet failing to break it. We maintain a bearish outlook for the pair and for our opinion to change we would require the pair to break the downward trendline incepted the beginning of the month. Should the pair’s direction be dictated by the bears, we could see it breaking the 1.1300 (S1) support level and aim for lower grounds. Should on the other hand the bulls take over, we could see it breaking the prementioned downward trendline, the 1.1345 (R1) resistance lien and aim for the 1.1385 (R2) resistance level.
Theresa May courts with the Labour party
UK’s PM Theresa May wrote a conciliatory letter to Labour leader Jeremy Corbyn, in which she questions, yet not rejects his plan for the UK to remain within the EU customs union. Analysts point out that UK’s PM may be playing for time as the UK parliament is to have another vote on the 14th of February and could take control of the process itself. There seems to be limited room for Theresa May as last week’s talks with the EU, had no result with EU leaders refusing to alter the Irish backstop clause. As uncertainty lingers on about the issue and the clock is ticking, the pound may weaken. Cable maintained a sideways movement breaking the downward trendline incepted since the 29th of January and remaining below the 1.2960 (R1) resistance line. As the pair’s price action has broken the prementioned downward trendline we switch our bearish outlook for a sideways movement, yet we maintain some reservations for the reappearance of the bears, as the financial releases today could weaken the pound and Brexit uncertainty lingers on. Should the pair come under the selling interest of the market, we could see it aiming if not breaking the 1.2830 (S1) support line. Should on the other hand, the market favor the pair’s long positions, we could see cable breaking the 1.2960 (R1) resistance level and aim for the 1.3070 (R2) resistance barrier.
Today’s other economic highlights
In today’s European session we get Norway’s inflation rates for January and from the UK the preliminary GDP for Q4, the manufacturing production for December as well as the trading balance for December. Please be advised that the Eurogroup is scheduled to have a meeting today and could affect the common currency’s direction.
As for the week ahead
On Tuesday, from New Zealand we get RBNZ’s interest rate decision. On Wednesday, we get UK’s inflation rates for January, from Eurozone’s industrial production for December, the US inflation rates for January. On Thursday, we get Japan’s GDP for Q4, China’s Trade Balance, Germany’s and Eurozone’s preliminary GDP for Q4, and the UK parliament is to have another vote on Brexit. On Friday, we get China’s CPI for January and UK’s retail sales for January.
• Support: 1.1300 (S1), 1.1260 (S2), 1.1215 (S3)
•Resistance: 1.1345 (R1), 1.1385 (R2), 1.1425 (R3)
• Support: 1.2830 (S1), 1.2710 (S2), 1.2610 (S3)
•Resistance: 1.2960 (R1), 1.3070 (R2), 1.3175 (R3)