26 Feb: “Risk-on” theme dominates, as traders anticipate successful trade deal. Fed’s Powell testifying today.

By | February 26, 2019

Markets remain upbeat after Trump announced that he would delay the imposition of more tariffs on Chinese imports beyond an original March 1 deadline and he is now planning a summit to seal the trade deal with Chinese President Xi. US stock indices, following on from yesterday’s 5.6% rise in China, are also firm although not to the same extent, and have risen around 0.4% on Monday, while in the FX markets, the Aud$ and the Nzd$ both remain firm on hopes of a positive outcome on the trade issue. US$Jpy has also taken a turn higher, and has finally cracked 111.00, a 2019 high, although the FX markets have otherwise been choppy but rangebound. US yields were steady with the US10Y at 2.67%

In the UK the PM May has said that a Brexit deal is within grasp and that a delay will not solve the crisis, while the UK opposition Labour Party has said that it will back call for second Brexit referendum to avoid a hard Brexit. Cable was choppy but going nowhere fast.

Elsewhere, Trump was busy on his Twitter account on Monday, complaining about OPEC and the oil price, which fell by almost 3%. The metals were pretty much flat and traded in a tight range as traders awaited the testimony to Congress from Federal Reserve chairman Jerome Powell.

Tuesday will be busy although there is not an awful lot on the calendar until later in the day to provide any potential directional move. Asia is empty; and aside from the German Consumer Confidence for March (exp 10.3), the UK will see the UK Inflation Report Hearing and a speech from the PM, Theresa May, there is little to come from Europe. The US will be busy though, with the focus to be on Fed Chair, Powell, who will testify to Congress. That aside, the US will also look to the December Housing Starts (exp 1.245 mio) and Building Permits (exp 1.28 mio), the Case Shiller House Price Index (exp 4.5%), Richmond Fed Mfg Index and Consumer Confidence for guidance. The ECB’s Mersch will also be speaking.

Economic data highlights will include:

Tue: German Consumer Confidence, UK Inflation Report Hearing, UK PM, May, Speech, US Building Permits, Housing Starts, Case Shiller House Price Index, Richmond Fed Mfg Index, API weekly Crude Oil Stock Inventory

CURRENCIES
EURUSD: 1.1361
Res  1.1370  1.1385  1.1400
Sup  1.1350  1.1315  1.1330
USDJPY: 111.10
Res  111.25  111.40  111.60
Sup  110.90  110.70  110.50
GBPUSD: 1.3097
Res  1.3110  1.3140  1.3170
Sup  1.3070  1.3050  1.3025
USDCHF: 1.0003
Res  1.0025  1.0045  1.0060
Sup  0.9995  0.9980  0.9960
AUDUSD: 0.7177
Res  0.7185  0.7205  0.7230
Sup  0.7160  0.7135  0.7110
NZDUSD: 0.6887
Res  0.6905  0.6920  0.6940
Sup  0.6870  0.6850  0.6830
INDICES / COMMODITIES
S&P.fs: 2803.03
Res  2810.00  2820.00  2830.00
Sup  2795.00  2785.00  2775.00
DJ30.fs: 26145.50
Res  26230.00  26400.00  26560.00
Sup  26000.00  25835.00  25655.00
SPI200.fs: 6133
Res  6150  6175  6200
Sup  6120  6095  6070
XAUUSD: 1328.23
Res  1335.00  1340.00  1345.00
Sup  1320.00  1315.00  1310.00
XAGUSD: 15.90
Res  16.00  16.10  16.20
Sup  15.80  15.70  15.60
WTI.fs: 55.48
Res  56.60  57.90  59.10
Sup  54.75  53.20  51.75