Morning brief for March 30

Morning brief for March 30

2019-11-11 • Actualizada

The UK has finally filed its divorce papers yesterday. As a wife wanting to scoop all family’s possessions she could lay her hands on, the UK voiced its ambitious demands in a quite menacing tone (the UK PM Theresa May cited “security” 11 times in her letter willing to remind the EU members of their vulnerability to terror attacks and thereby push them to struck a security deal with the UK). German Chancellor Angela Merkel took a hard stance saying that Britain’s future relationships with the EU will be discussed only after the UK “honors all its legal, financial and budgetary obligations” (in lay terms, after the country pays a bill of around 60 billion euros). It seems that it’s going to be a rather tough and messy separation. And it might last more than 2 years considering the case of Canada-EU free trade agreement. It took 5 years to strike a deal and another 2 years to ratify it.

GBP/USD edged up to 1.2440 after dropping to the sterling’s one week low (1.2375). Now, the pound is passing through its corrective phase. Most likely, it will be ranging within the tight range of 1.2475-1.2350 (the borders of Ichimoku cloud on the daily timeframe).

The euro was down to 1.0750 from its earlier 1.0790 after ECB policymakers claimed that they are not ready to recourse from their easing programs (well, not until June).  Fed’s officials said they are ok with hiking two more times this year given the progress on the Fed’s mandate targets of full employment and 2% inflation rate. In today’s European session we will get CPI figures for Spain And Germany. They might send quotes lower (as inflation rates are expected to have eased in March). The immediate support can be found at 1.0725 (100-H4 MA). In case of a deeper pullback, the prices might stumble across the support at 1.0690 (38.2% Fibo level traced from this year low).

USD/JPY surged to 111.20 in the Asian session having partially recouped its losses after Trump’s failure to repeal Obamacare bill. Today’s focus will be on the US quarterly GDP reading, unemployment claims and numerous comments from the Fed’s members (Fed Mester, Kaplan, Williams, Dudley are on the roster). The US dollar will likely be responsive to GDP reading that, according to the consensus forecast, shouldn’t change from the last-month prints. The talk of Fed’s officials will be less interesting as we have already heard lots of them this week.

Commodity-linked currencies (AUD, CAD, and NZD) were the leaders of the board yesterday supported by rising surging oil prices and steadiness in iron ore. In the Tokyo morning, they were down a few points.

Aussie slid to 0.7655. But the positive undertone for AUD/USD is still intact unless bears manage to reclaim the support at 0.7610.

Kiwi lowered to 0.7020. NZD/USD is still in the consolidation phase. It might continue ranging within the quite broad range of 0.6990-0.7090.

The economic calendar for commodity currencies light. The loonie’s watchers will be waiting for the monthly update of raw material prices coming from Canada at 12:30 MT time. At the present moment, USD/CAD is hovering below the key resistance level at 1.3353 (50-H4 MA). If this level is broken, the prices will try to test the next hurdle at 1.3380. 

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