27 Feb: Brexit developments send Cable higher. US$ under pressure after Powell’s testimony. US Durable Goods ahead.

By | February 27, 2019

 

The US$ is under some downside pressure again on Wednesday, with the main interest lying in Sterling which has shot to a 6 month high after the UK moved towards avoiding no-deal Brexit. The UK PM, Theresa May, announced to hold three separate votes on a Brexit deal, no-deal Brexit or to delay; the main point being, a no-deal Brexit is no longer the default position on March 29, although it could still happen with explicit consent of the Parliament.

Elsewhere, Fed Chair Jerome Powell reaffirmed that the Fed are ready to wait and see how economic/political events unfold before making any decision on when next to raise rates and the cautious tone did little to underpin the dollar, which ended the US session under some mild downside pressure. US yields were a touch lower (US10Y; 2.63%) while stocks, WTI and the metals were all pretty much flat at the end of the session as traders took away few fresh insights from Powell’s testimony before Congress.

In terms of data, the dollar was not helped by a big downside surprise in the December Housing Starts which came in at -11.2%,  versus the forecast of +3.2%. Earlier in the day, the German GfK consumer confidence for February was unchanged at 10.8, but economic expectations dropped  by 6.5 points, to 4.2, the fifth decline in a row and the lowest reading since March 2016.

Wednesday will be busy again, beginning with the NZ January Trade Balance (exp -$300 mio mm, -$5.496 bio yy) and the Australian Construction Work Done for Q4 (exp 0.4%). Later on from Europe, we get the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate and Consumer Confidence and speeches from the ECB’s Coeure and the Buba’s Weidmann. From the US we get the January Durable Goods Orders (exp 0.2%mm), and the December Wholesale Inventories and Goods Trade Balance (exp -75.03 bio).

Economic data highlights will include:

Wed: NZ Trade Balance, Australian Construction Work Done – Q4, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, US Wholesale Inventories, Durable Goods, Pending Home Sales, Fed Chair Powell testimony to Congress.

CURRENCIES
EURUSD: 1.1392
Res  1.1405  1.1420  1.1440
Sup  1.1375  1.1315  1.1345
USDJPY: 110.56
Res  110.80  111.00  111.25
Sup  110.25  110.00  109.70
GBPUSD: 1.3267
Res  1.3295  1.3330  1.3365
Sup  1.3235  1.3200  1.3165
USDCHF: 0.9991
Res  1.0010  1.0025  1.0040
Sup  0.9985  0.9970  0.9955
AUDUSD: 0.7190
Res  0.7205  0.7230  0.7250
Sup  0.7165  0.7140  0.7115
NZDUSD: 0.6897
Res  0.6905  0.6920  0.6940
Sup  0.6870  0.6850  0.6830
INDICES / COMMODITIES
S&P.fs: 2798.78
Res  2805.00  2815.00  2825.00
Sup  2790.00  2780.00  2770.00
DJ30.fs: 26117.50
Res  26230.00  26400.00  26560.00
Sup  25975.00  25835.00  25655.00
SPI200.fs: 6127
Res  6150  6175  6200
Sup  6095  6070  6045
XAUUSD: 1328.21
Res  1335.00  1340.00  1345.00
Sup  1320.00  1315.00  1310.00
XAGUSD: 15.92
Res  16.00  16.10  16.20
Sup  15.80  15.70  15.60
WTI.fs: 55.61
Res  56.60  57.90  59.10
Sup  54.75  53.20  51.60