Financial market research and analysis

The pound eased as the Irish border issue curbed the enthusiasm on an eventual progress in the Brexit negotiations between the UK and the European Union. The pound has been the biggest loser against the US dollar in the basket of G10 currencies. Cable retreated to 1.3406. Irish PM Leo Varadkar said that there is still time to reach an agreement before the Brexit talks resume on December 14. However, every lost battle means less hope for a significant progress in the Brexit talks and the time is running out. Businesses in the UK are impatient to have a clearer insight on the future. In the dirt of positive news, Cable will likely face some profit taking.

All FTSE 100 sectors opened upbeat on the back of a softer pound.

The UK's November services PMI is due today. A solid data could limit the earlier losses. The key Fibonacci support to GBPUSD’s November rebound stands at 1.3355 (major 38.2% retracement). Intermediate support could be found at 1.3460 (100-hour moving average) and 1.3390 (200-hour moving average). Solid offers trail below 1.3550.

The EURGBP cleared the 200-day moving average (0.8833). A lack of enthusiasm in the pound could gather a sufficient positive momentum to surpass this level. Gains could extend toward 0.8868 (minor 23.6% retracement on August – October decline).

The EURUSD is rangebound within 1.1800-1.1900. Buyers are touted at 1.1805 (major 38.2% retracement on November rebound & 100-day moving average) as the 1.20 level is still targeted by the bulls, despite a softened positive momentum on German political uncertainties. Meanwhile, the DAX (+1.53%) outperformed its European peers on Monday, as investors see no major risks to the German economy or the European integrity at this point in time.

Due today, the final services PMI should confirm a solid activity in November across the Eurozone countries.


US markets mixed on debt ceiling, government shutdown risks

The US dollar pared a part of yesterday’s gains against the G10 majors. Due to various positive and negative news in the US headlines, traders couldn’t fully benefit after the Senate passed the much-expected tax reform bill. The US domestic politics will likely remain the main driver on Tuesday. Investors focus on the federal spending plan to avoid a government shutdown, the US tax reforms as well as the Russian investigation.

The US stocks were mixed on Monday. The Dow Jones and the S&P500 stocks renewed record, yet the sell-off in technology stocks dented the appetite. The S&P500 technology sector erased 2.15% and the NASDAQ closed the session 1.05% lower.

Gold consolidates within the lower range of the daily Bollinger bands. The lower band ($1’270) gives support to the recent weakness. More buyers are touted near the 200-day moving average ($1’265) to join the buy-side on fading boost in the US yields. The recovery could extend to $1’280/1’282 zone, including the 50-day moving average and the mid-Bollinger band.


USDJPY edges lower on soft USD, US yields

The USDJPY remained capped at 113.00 (minor 23.6% retracement on September – November rise). The US yields eased following the knee-jerk rise on the US tax reform approval. The 10-year yield returned below the 2.40% level. The weaker US dollar and the softening US yields could further weigh on the USDJPY in the short-run. The first support is eyed at 112.16 (hourly Ichimoku cloud base) and 111.80 (200-hour moving average).


AUD gains to be limited as 3Q exports disappoint

The Reserve Bank of Australia (RBA) maintained its cash target rate unchanged at 1.5% as expected. RBA stated that the outlook for non-mining investment improved, while some employers have hard time finding the right skills. The commodity currencies were better bid in Asia. The Australian dollar was the biggest G10 gainer against the greenback, although the Australian trade deficit improved less than analysts expected in the third quarter. Exports slumped from 0.30% to 0.00% compared with 0.25% expected by analysts. The AUDUSD recovered past the daily upper Bollinger band (0.7650) on softer US dollar and firmer iron ore futures (+1.01%). However, traders remain seller on rallies due to a severe lack of carry appetite in this market caused by significantly squeezed rate differential. Resistance is eyed at 0.7685 and 0.7710 (50 and 200-day moving averages respectively).


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