30 Jan: Mostly quiet apart from lower Sterling on Brexit vote. Now awaiting Australian CPI. FOMC in focus later.

By | January 30, 2019

It has been a mostly quiet session in the FX markets, with the US$ little changed against most counterparts as traders remain cautious ahead of today’s FOMC meeting and trade talks between China and the US. The Brexit debate has been continuing in the UK Parliament, ensuring that Sterling was choppy for much of the session, before eventually heading lower in late US trade after several amendments to Theresa May’s plan failed to pass through the parliament. The market was hoping that the MPs would vote to avoid a no-deal Brexit but that did not happen and the EU was hot off the mark to shoot down any renewal of negotiations with the UK. Where next? Who knows!

Elsewhere stocks ended mixed, with the DJI trading mildly higher, while the S+P and Nasdaq lost a bit of ground. Apple released its results after the markets closed and reported an EPS of $4.18 vs $4.17 estimate on revenue of $84.3B vs $84B estimate. The main mover of the day has been Oil (WTI: +2.4%), which moved higher due to the uncertainties of supply from Venezuela, and Gold, which is up by $8oz (0.65%), an 8 month high. Note that Iron Ore is also up by another 1.5%, which should help to underpin the Aud$.

Wednesday will begin with the Japan Retail Trade and the Australian CPI (exp 0.4%mm, 1.7%yy; Trimmed mean, exp 1.8%yy). Europe will then follow with the German Consumer Confidence and CPI (exp -0.8%mm, 1.6%yy; HICP, exp 1.8%yy) and the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Business Climate, although most of the session is likely to be spent disseminating the Brexit vote. The main event of the day will be the FOMC Meeting, although no change to policy is expected this month and the interest will lie in the wording of the Statement and in J.Powell’s Press Conference. In particular, traders will be looking to see if the Fed intends to stop reducing the size of the balance sheet. If they do stop, this will equate to an easier monetary policy and will likely send the US$ lower. If the balance sheet does continue to be reduced at its current pace, by not reinvesting the proceeds of maturing bonds, then the dollar should head higher.

Also from the US today, we will see the January ADP Jobs data, Pending Home Sales and the EIA Crude Oil Stocks Weekly Change.

Economic data highlights will include:

Wed: Japan Retail Trade, Australian CPI, German Consumer Credit, UK Consumer Credit, Mortgage Approvals, German CPI, US Q4 Preliminary GDP, ADP Jobs data, Pending Home Sales, FOMC Interest Rate Decision

CURRENCIES
EURUSD: 1.1433
Res  1.1445  1.1465  1.1490
Sup  1.1410  1.1390  1.1360
USDJPY: 109.34
Res  109.50  109.70  109.90
Sup  109.15  109.00  108.80
GBPUSD: 1.3066
Res  1.3100  1.3125  1.3150
Sup  1.3055  1.3035  1.3010
USDCHF: 0.9946
Res  0.9960  0.9980  1.0000
Sup  0.9925  0.9900  0.9875
AUDUSD: 0.7151
Res  0.7175  0.7205  0.7225
Sup  0.7135  0.7120  0.7100
NZDUSD: 0.6829
Res  0.6850  0.6870  0.6885
Sup  0.6815  0.6795  0.6775
INDICES / COMMODITIES
S&P.fs: 2640
Res  2650  2665  2680
Sup  2620  2605  2590
DJ30.fs: 24577
Res  24615  24680  24745
Sup  24535  24480  24420
SPI200.fs: 5836
Res  5870  5895  5925
Sup  5810  5780  5750
XAUUSD: 1311.76
Res  1315  1320  1325
Sup  1305  1300  1295
XAGUSD: 15.84
Res  15.95  16.05  16.15
Sup  15.75  15.65  15.50
WTI.fs: 53.24
Res  53.75  54.10  54.45
Sup  53.00  52.55  52.15