FX Explained MacroWatch: w/c 09/09/19

Intermediate

Recap: Brexit grabs the headless (again)

Brexit
  • The US and China trade war took a positive turn with a Chinese announcement that trade talks would restart in October.
  • The UK Government had in late August effectively announced the closure of Parliament early (proroguing Parliament), which had allowed limited time for Members of Parliament (MPs) to block the UK leaving the EU on 31st October without a deal.
  • MPs last week did though defeat the Government on three occasions, taking control of the Parliamentary agenda to allow for the passing of a bill that forces the UK Government to ask for a Brexit negotiation extension into January 2020, plus rejecting the Government’s request for a general election in October. This leave a no deal Brexit far less likely now at the end of October.
  • The third significant geopolitical development last week was in Hong Kong, as the extradition bill that had started the pro-democracy demonstrations, was withdrawn.
  • These three positive events saw global stock markets rally higher, whilst safe haven assets like bonds sold off.
  • In the forex space, the Pound allied against both the US Dollar and Euro (GBPUSD higher, EURGBP lower). In addition, the previous US Dollar strength (as a safe haven) was reversed last week as the greenback weakened against many currencies. Except versus the Japanese Yen, which was even weaker, as the ultimate safe haven currency lost ground as global financial markets moved back towards a risk on theme.
  • On the macroeconomic data front, early September has seen Asia and European economic measures worsen, whilst in the US the ISM Manufacturing Index came in below expectations with the Non-Manufacturing Index beating expectations. The US Employment report ended last week and was also mixed, though the Non-Farm Payroll data was marginally below consensus (yet the broad market response was subdued).
  • A big focus this week will be on Thursday’s European Central Bank Meeting, with a potentially far more dovish tone anticipated by the markets.

Key this week

Date Key Macroeconomic Events
09/09/19 China trade data; UK GDP; UK Industrial & Manufacturing Production
10/09/19 China Consumer Price Index (CPI); UK Employment data
11/09/19 US Producer Price Index (PPI)
12/09/19 EU Industrial Production; German CPI; ECB monetary policy meeting; US CPI
13/09/19 US Retails Sales; Michigan Consumer Sentiment Index

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

Comment on this video

Your email address will not be published. Required fields are marked *


Latest Related News

Markets keep the party going, despite surging US COVID-19 cases

Macroeconomic/ geopolitical developments A fairly quiet week on the macroeconomic and geopolitical front, with the holiday shortened session in the US on Thursday and Friday because of Thanksgiving.The main development was on the US political side, as the Presidential transition of power has started properly, and although the Trump administration continues dispute the election result, they have allowed Biden’s team to start the transition. Also,… Continued

US Dollar stays weak as AUDUSD and USDCAD approach key levels

Dollar Index reaches final major support (DXY forecast)Euro breaks up (EURUSD forecast)Pound posts negative (GBPUSD forecast)Aussie reaches major monthly resistance (AUDUSD forecast)Dollar-CAD approaches its major support zone (USDCAD forecast) Continued

Euro and Pound stay bullish – EURUSD and GBPUSD forecasts

A weaker US Dollar still the dominant Forex markets theme with the ongoing “risk on” environment.“Risk on” is being driven by the start of the US Presidency transition of power, the appointment of Janet Yellen as US Treasury Secretary, plus from the three vaccine announcements in November.The Euro has pushed above 1.1900 and resumed the positive tone seen earlier November, aiming EURUSD into month-end and… Continued

“Risk on” mode reflected by “commodity currency” resilience

Macroeconomic/ geopolitical developments The announcement last Monday from Moderna that their COVID-19 vaccine produced very positive trial results sustained the prior “risk on” theme, evident after the similar announcement from Pfizer the Monday before. This “risk on” tone was further reinforced by another positive statement from the Astra Zeneca/ Oxford University trial in the week.On the US politics side, there is still a negative impact… Continued

Quiet week sees US Dollar Drift lower (DXY)

Cable breaks up - GBPUSD forecastDollar-Yen fails at resistance - USDJPY forecastKiwi outperforms Aussie - NZDUSD, AUDUSD and AUDNZD forecasts Continued

Forex Brokers in your location


SIGN UP

72% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

74-89% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

75% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

76.4% of retail investor accounts lose money when trading CFDs with this provider.