8 Feb: US$ steady, Gbp volatile. Stocks down on US/China trade concerns. RBA SOMP ahead. Thin calendar elsewhere.

By | February 8, 2019

Currency markets have been mostly steady on Thursday, with the US generally underpinned, although Sterling had a wild ride following the BOE meeting. Cable initially headed sharply lower after the BoE left rates on hold but downgraded economic forecasts due to uncertainty about Brexit.  It then bounced back, equally sharply, after Mark Carney indicated that markets should not prepare for a rate cut despite the weaker outlook. Also underpinning Sterling are the growing hopes that the UK will make some progress in coming days in negotiations on its departure from the EU, although the soundbites coming from the EU suggest that there is no room for manoeuvre. For its part, the US$ does look underpinned and the DXY charts look firm although note that US yields are sharply lower today, so I don’t think the dollar is going to run away to the topside (US10Y; 2.65%).

Elsewhere, data was thin although the EU slashed growth its outlook, with 2019 growth forecast to be 1.3% down from the prior forecast of 1.9%, while noting that there is “a high level of uncertainty” surrounding the outlook – and the projections are subject to downside risks. Not really a positive tone for the Euro.

Elsewhere stocks moved sharply lower after an announcement that Donald Trump will not meet with the Chinese premier, Xi, before the tariff deadline, but may meet afterwards. This has rekindled U.S.-China trade fears and has caused the US indices to fall by 1.0% -1.5% and has taken oil with it, with WTI down by 2.8%.

Friday will wrap up with the RBA Statement of Monetary Policy, which could well continue to exert downside pressure on the currency. Later on from Europe we get, the German Trade Balance and Current Account, while the US will be thin with just the Michigan Consumer Sentiment Index to provide guidance.

Economic data highlights will include:                                                  

Fri: Japan Trade Balance, Current Account, Eco Watchers Survey, Australian RBA SOMP, German Trade Balance, Current Account , UK GDP, Michigan Consumer Sentiment Index , Baker Hughes Oil Rig Count

CURRENCIES
EURUSD: 1.1349
Res  1.1390  1.1425  1.1460
Sup  1.1325  1.1290  1.1265
USDJPY: 109.82
Res  110.15  110.45  110.80
Sup  109.55  109.25  109.00
GBPUSD: 1.2958
Res  1.2990  1.3025  1.3060
Sup  1.2925  1.2895  1.2850
USDCHF: 1.0017
Res  1.0040  1.0070  1.0105
Sup  0.9990  0.9965  0.9930
AUDUSD: 0.7103
Res  0.7120  0.7140  0.7165
Sup  0.7050  0.7075  0.7025
NZDUSD: 0.6752
Res  0.6780  0.6800  0.6825
Sup  0.6745  0.6725  0.6705
INDICES / COMMODITIES
S&P.fs: 2693
Res  2710  2725  2740
Sup  2685  2670  2655
DJ30.fs: 25060
Res  25230  25390  25520
Sup  25000  24915  24790
SPI200.fs: 6003
Res  6030  6065  6100
Sup  5980  5950  5920
XAUUSD: 1310
Res  1315  1320  1325
Sup  1305  1300  1295
XAGUSD: 15.74
Res  15.80  15.95  16.10
Sup  15.60  15.45  15.25
WTI.fs: 52.62
Res  53.40  54.45  55.70
Sup  51.70  50.50  49.50

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