Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei (-0.72 %), Hang Seng (-0.99 %), CSI 300 (-0.23 %), KOSPI (+0.04 %), ASX 200 (-0.09 %)
- Commodities: WTI Crude $50.97 (+0.35 %), Brent Crude $52.64 (+0.44 %), Natural Gas $3.22 (-0.56 %), Gold $1255.42 (+0.21 %), Copper $218.45 (-0.05 %)
What traders are talking about:
GBP short squeeze
The GBP/USD recovered overnight after briefly trading below 1.21 against the Dollar yesterday. News that UK Prime Minister May has accepted that the Parliament will be able to vote on the plan of taking the UK out of the EU helped the Pound a bit. While the vote will not prevent the country to leave the Union, it will be used by pro-EU members as a tool to put pressure on May.
The Pound pairs remain rather illiquid and traders might better get used to the increased volatility. There have also been some sharp moves in the cross pairs, with GBP/JPY rallying from 125 to 127.50 overnight and EUR/GBP tumbling from 0.9130 to 0.8970 within only four hours.
GBP/USD techs are bearish and further losses seem likely, with selling interest still high on rallies. It is best to use the big figures as support levels for now, with 1.22, 1.21 and 1.20 the key levels to the downside.
Risk-off...kind of
Sentiment in markets was clearly bearish at yesterday's NY close, with the Yen and Dollar up and all other major currencies & major stock indices down. However, the short squeeze in GBP has put some pressure on the Greenback overnight, and allowed the commodity currencies to bounce.
AUD/USD managed to find decent support at 0.7530 and rose to a high of 0.7588 overnight. NZD/USD followed it higher, although it struggled ahead of 0.71. Meanwhile, USD/CAD retraced from 1.3270 to 1.3210.
Overall, the US Dollar remains strong. What has been driving it? First of all, US economic data in the past few weeks has been strong, and expectations of a December rate hike by the Fed have increased. While the central bank has shown to be extremely cautious, it will have a tough time to justify keeping rates unchanged in December should the numbers stay solid and if markets remain relatively stable. Secondly, the chaotic price action in the Pound is something that benefits the Greenback, given its status of a safe haven and the current rate expectations.
PBoC sets USD/CNY fix at 6.7258
China's central bank put today's USD/CNY rate at 6.7258, up from 6.7098 yesterday. USD/CNH, the offshore Yuan pair, rallied from 6.7208 to 6.7312 so far.
FOMC Minutes
Today’s economic calendar is relatively light. Two FOMC members, Dudley and George, will speak during the US trading session, but the main event of the day will be the release of the FOMC meeting minutes. However, don’t expect too much from it, as there is a good chance it will be a non-event like the previous few releases.
Economic Calendar:
- 10:00 BST - Euro Zone Industrial Production
- 13:00 BST - Federal Reserve Member Dudley speaks
- 14:40 BST - Federal Reserve Member George speaks
- 15:00 BST - US JOLTs Job Openings
- 19:00 BST - FOMC Meeting Minutes
- 22:30 BST - New Zealand Business NZ PMI