18 Jan: Cable higher on Brexit optimism! UK Retail Sales, US Industrial data ahead.

By | January 18, 2019

With the exception of some strong buying of Sterling it had been another uninspiring session until late in the US day, when a press report  suggested that the US is considering lifting some China tariffs in an attempt to break the trade stalemate. The report was then dialled back by a Treasury official who said that no recommendations had been made on tariffs.  Until the press report, most currency pairs, commodities and stock markets had been trading pretty much unchanged from this time yesterday, although the news headline saw the Aud and Kiwi both jump by around 50 pips before sharply reversing much of their gains once the denial came through. US$Jpy also broke above the strong resistance at 109.00/10 to finish the day near session highs of 109.40. US Stock indices also moved up by around 0.5% on the headline while WTI was also slightly stronger. US yields remained firm with the 10Y yield @ 2.74%.

For its part, Cable rose to a two-month high against both the dollar and the Euro, extending its recent gains on growing optimism that the UK can avoid a no-deal Brexit. A multitude of options remain on the table as to how Brexit will unfold, including a general election or a second referendum vote, but traders seem to believe that the risks of a hard, no-deal Brexit have receded considerably despite the headlines.

Friday will have a bit of secondary data to get through but nothing that is likely to move the FX markets too far. Of more importance will be any political headline and also the ongoing US corporate reporting season, which may again underpin the stock markets.

The session kicks off with the NZ Business PMI and the Japan inflation data for December. Europe will see the November EU Current Account and the UK December Retail Sales, while the US will have the December Industrial Production, Capacity Utilisation, the January Michigan Consumer Sentiment Index and a speech from FOMC member Williams.

Economic data highlights will include:                                                                                                     

Fri: NZ Business PMI, Japan National CPI, EU Current Account, UK Retail Sales, US Industrial Production, Capacity Utilisation, Wholesale Inventories, Michigan Consumer Sentiment Index

CURRENCIES
EURUSD: 1.1388
Res  1.1415  1.1440  1.1465
Sup  1.1370  1.1345  1.1305
USDJPY: 109.22
Res  109.40  109.65  109.85
Sup  109.10  108.90  108.65
GBPUSD: 1.2984
Res  1.3000  1.3030  1.3070
Sup  1.2955  1.2920  1.2880
USDCHF: 0.9939
Res  0.9955  0.9980  1.0010
Sup  0.9910  0.9875  0.9840
AUDUSD: 0.7194
Res  0.7200  0.7220  0.7235
Sup  0.7180  0.7150  0.7130
NZDUSD: 0.6765
Res  0.6780  0.6790  0.6810
Sup  0.6755  0.6740  0.6725
INDICES / COMMODITIES
S&P.fs: 2627
Res  2655  2670  2685
Sup  2625  2610  2590
DJ30.fs: 24316
Res  24455  24645  24835
Sup  24255  24155  23995
SPI200.fs: 5812
Res  5840  5865  5890
Sup  5790  5760  5725
XAUUSD: 1291
Res  1295  1300  1305
Sup  1285  1280  1275
XAGUSD: 15.53
Res  15.60  15.75  15.95
Sup  15.45  15.30  15.15
WTI.fs: 52.33
Res  52.70  53.25  54.25
Sup  51.65  51.00  50.35