The United Kingdom is splitting from the European Union’s 27-member trade bloc in a long, Byzantine process. Here’s what’s at stake.
Foreign exchange markets start Wednesday on a choppy note, as themes driving major currency pairs including Brexit and worries about Italy remain firmly in place.
CRYPTOWATCH Major cryptocurrency prices are trading mostly unchanged Wednesday. After rising as much as 10% on Monday, bitcoin, the world’s largest digital currency, broke out of a triangle formation, which if holds, one analyst said could point to another leg higher, testing another important level.
Today’s US/Canadian data might provide some impetus ahead of FOMC minutes, while a modest USD rebound helped find decent support ahead of 1.2900 handle
Euro zone countries must each ensure their budgets are stable and economies competitive, German Chancellor Angela Merkel said ahead of a European Union summit on Wednesday, as Italy weighs expansionary budget plans that risk EU rejection. Italy, the euro zone's third largest economy, has prepared an expansionary 2019 budget that sets up a showdown with authorities in Brussels over compliance with EU rules. The European Commission may reject the plans.
Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to an uptrending Gann angle at 1.1552 and the 50% level at 1.1559. Basically, look for a downside bias on a sustained move under 1.1552. An upside bias is likely to develop on a sustained move over 1.1559.
Gold prices edged lower on Wednesday as equities and the dollar gained amid waning risk-averse sentiment and strong reports. US Futures point to a lower open ahead of the FOMC meeting.
Gold improved on Tuesday, but the market posted an inside move, which typically indicates investor indecision and impending volatility. Traders said the gains were related to short-covering. New longs appeared to be scarce since the rally in the equity markets forced them to re-evaluate their reasons for being long.
Euro zone inflation accelerated in September in line with market expectations, driven mainly by a spike in energy prices, but core inflation, which excludes energy and unprocessed food costs, edged lower, data showed on Wednesday. The European Union's statistics office Eurostat said consumer prices in the 19 countries sharing the euro rose 0.5 percent month-on-month in September for a 2.1 percent year-on-year rise, matching expectations of economists polled by Reuters. Energy prices were the biggest single contributor to the year-on-year gain, adding 0.9 point to the overall outcome.
The gold market traded sideways mostly through the Tuesday’s session as it has been trying to gain some momentum. The gold prices have shown strong upside momentum in the last several sessions and pull-back under this condition will offer a nice buying opportunity. The $1220 level underneath is an excellent support point for this market and will attract a lot of buyers into the market.
Inflation numbers came in softer than expected, which should ease pressure on the BoE further as the British Government attempts to garner a Brexit deal
The market could witness significant buying interest around the 1.31 and 1.30 level, all which are strong support points. The 0.71 and 0.70 levels underneath are the strong support points and the market is likely to hold on the levels. The pair retraced from the 61.8% of the Fibonacci level at 111.50 level, an area which has been important in the past.
Market worries about a “no-deal” Brexit are on the rise again after negotiations between London and Brussels hit a hurdle last weekend. What’s it mean for British pound?
Global stocks rise on Wednesday morning after yesterday’s strong earnings reports. Investors will focus on the Fed minutes today and China’s GDP on Friday.
Based on the early trade, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at .7122. This angle has been guiding the Forex pair higher since October 5.
Based on the early trade, the direction of the December Comex Gold futures contract on Wednesday is likely to be determined by trader reaction to the 50% level at $1222.70.
The pair’s direction moving forward is highly likely to be influenced by UK macro data outcome.
Strong U.S. economic data and hawkish Fed minutes should be bullish for Treasury yields which will make the U.S. Dollar a more attractive investment and put pressure on the Australian and New Zealand Dollars.
Gold markets continue to grind sideways with a slightly upward tilt during the day on Tuesday, as we continue to see a lot of safety trade buying. The Gold markets have offered a bit of a safe haven as they have gotten extraordinarily cheap as of late, but at this point we are a bit overextended.
Demand for risk, economic reports and the Fed minutes should dictate the direction of the USD/JPY on Wednesday.
The US dollar rallied during the day on Tuesday, reaching towards the recent consolidation area. The pair of course is very sensitive to stock markets overall and the risk appetite in general, so I think that we should pay attention to the S&P 500 as a result.
The British pound took off to the upside during the Tuesday session against the Japanese yen as more of a “risk on” flavor came back into the marketplace. However, as the Americans have stepped on board, it looks as if we may be a little overstretched as we are running into some recent selling pressure around the ¥148 level.
The Euro has been rather choppy during the Tuesday trading session, hanging about the 1.16 level, or just below it. At this point, I think that perhaps the market needs to pull back a little bit to find some value.
The Australian dollar continued to grind higher during the day on Tuesday, breaking above the 0.7140 level, and looking very much likely to continue going higher. At this point, the Aussie seems to be trying to build a bit of a base and recover from the recent selling pressure.