The pound, rose yesterday on news of a possible no Brexit, despite a shock slide in the Services PMI for November. According to Reuters, economists at JP Morgan, increased the odds of the UK remaining in the EU after ECJ’s opinion on Tuesday. The pound however corrected lower as the UK attorney general’s advice for the UK government was made public. The attorney general noted that the Irish backstop could very well prove permanent, practically providing a different regime from Northern Ireland. The letter could make the positions of hard Brexiteers even more rigid, especially DUP’s, ahead of the vote in Parliament on the 11th of December. We could see volatility continuing for the pound today as more Brexit headlines are expected.
Cable rose yesterday breaking consecutively the 1.2700 (S1) resistance line (now turned to support) and the 1.2780 (R1) resistance hurdle, however corrected below the latter, later on. As uncertainty increases and cable seems to remain below the downward trendline incepted since the 21st of November, we maintain our bearish bias regarding the pair’s direction. Should the bears continue to dictate the pair’s direction we could see it breaking the 1.2700 (S1) support line and aim for the 1.2630 (S2) support level. On the other hand, should the bulls take over, we could see the pair breaking the 1.2780 (R1) resistance line.
OPEC meeting and oil production cuts
OPEC meets in Vienna today, in order to decide any further action regarding the production of oil. According to media reports, Oman’s Oil Minister stated that early discussions between the group’s most powerful members and Russia seem to point towards oil production cuts for a period of 6 months. Analyst’s estimations about the size of the possible production cuts, vary from 1-1.5 million barrels per day. The group could be facing US president Trump’s opposition who tweeted that the world does not want to see or needs higher oil prices. We expect volatility for oil prices, should the final decision and the organisation’s communique differ from the market’s expectations.
WTI prices moved in a sideways manner over the past three days between the 52.10 (S1) support line and the 54.15 (R1) resistance line. Technically it is important to note that the black gold’s price action has broken the downward trendline incepted since the 3rd of October and seems to be waiting OPEC’s decision, hence we lift our bearish bias, at least temporarily. Should the commodity come again under the selling interest of the market once again, we could see it breaking the 52.10 (S1) support line and aim if not break the 49.40 (S2) support level. Should on the other hand, oil’s long positions be favored by the market, we could see its price action breaking the 54.15 (R1) resistance line and aim if not break the 56.15 (R2) resistance zone.
In today’s other economic highlights:
In today’s European session, we get Germany’s factory orders growth rate for October. In the American session from the US we get the ADP employment figure for November, the trade balance figure for October, the factory orders growth rate for October, the ISM non-manufacturing PMI figure for November and the EIA crude oil inventories figure. Staying in the Americas, from Canada we get the October’s trade balance figure and the Ivey PMI for November. As for speakers, RBA’s Debelle, BoE’s Ramsden, BoC Governor Stephen Poloz and Atlanta Fed President Raphael Bostic speak. We would focus more on BoC governor Stephen Poloz’s press conference, as he will be speaking about the yesterday’s interest rate decision.
Support: 52.10 (S1), 49.40 (S2), 47.35 (S3)
Resistance: 54.15 (R1), 56.15 (R2), 58.45 (R3)
Support: 1.2700 (S1), 1.2630 (S2), 1.2555 (S3)
Resistance: 1.2780 (R1), 1.2850 (R2), 1.2925 (R3)