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Oil Market Spooked By Trump Comments
Market movers today
Today, a lot of information on the current situation in the US housing market is due out, such as housing starts, building permits and house prices in December this afternoon. US consumer confidence for February from the Conference Board is also due, which is likely to have rebounded after the shutdown ended. Ahead of ISM manufacturing due out on Friday, keep an eye on the Richmond index at 16:00 CET.
Fed Chair Jerome Powell begins his two-day hearing in the US Congress when he testifies before the Senate Banking Panel at 16:00 CET. As FOMC members have been very outspoken so far this year, we do not think Powell will send any new signals or move the markets by much. The Fed has clearly stated that it is on hold for now and is about to end its balance sheet run-off this year (announcement probably as early as at the March meeting).
In the UK, many Bank of England members (including Governor Mark Carney) are due to testify before the UK Treasury Committee. The BoE seems to be on hold until 'the weather has cleared up'.
Also in the UK, note there is no vote on a Brexit deal in the House of Commons today, as PM May has postponed it by another two weeks. However, the indicated vote tomorrow is still on and the question here is whether the so-called Cooper amendment - which would force May to ask for an extension of Article 50 in case she does not get a deal or wins backing for one - will pass or not. We think it is a close call given it is not the last chance the MPs will get to force May's hand. Furthermore, May is said to be discussing a possible extension of Article 50 deadline with her cabinet today.
In Europe, consumer confidence indicators in Germany and France are due out. We will look for any signs of a stabilisation in the European soft indicators.
Selected market news
Oil prices dropped more than 3% yesterday after US President Donald Trump said that 'oil prices are getting too high' and that 'OPEC should relax'. In October 2018, he made similar comments, which helped initiate the steep downturn in oil prices in Q4 - hence the anxiety in the market towards his comments. The price on Brent crude settled below USD65/bbl down from above USD67/bbl.
On Brexit, the market received two important pieces of news yesterday. First, PM Theresa May is said to be meeting with her cabinet to discuss a possible extension of Article 50 deadline; hence, a delay on Brexit. Second, Labour leader Jeremy Corbyn is said to be supportive of the so-called Cooper amendment and of a public vote on Brexit. GBP rose around 0.25% vis-à-vis EUR and USD on the news.
Elliott Wave View: Downside Pressure In EUR/GBP
EURGBP shows a sequence of lower low from August 29, 2017 high, suggesting further downside is likely. The bounce to 0.9105 on January 3, 2019 high ended wave (2). From there, pair declines as a double three Elliott Wave structure where wave W ended at 0.8615 and wave X ended at 0.884. Pair still needs to break below wave W at 0.8615 to confirm that the next leg lower in wave Y has started. Until then, a double correction in wave X still can not be ruled out.
The internal of wave W unfolded as a zigzag Elliot Wave structure. Down from 0.9105, wave ((a)) of W ended at 0.8874, wave ((b)) of W ended at 0.8985 and wave ((c)) of W ended at 0.8615. The bounce in wave X unfolded as a double three structure in lesser degree where wave ((w)) ended at 0.8821, wave ((x)) ended at 0.8727, and wave ((y)) ended at 0.884. Wave Y is currently in progress as a double three structure. Near term, expect pair to extend lower towards 0.846 – 0.853 area to end wave ((w)) of Y, then it should bounce in wave ((x)) of Y before the decline resumes.
1 hour EURGBP Elliott Wave chart
Euro Extends Its Gains In The Asian Session
For the 24 hours to 23:00 GMT, the EUR rose 0.18% against the USD and closed at 1.1360.
In the US, data indicated that the US Chicago Fed national activity index unexpectedly fell to a level of -0.43 in January, defying market expectations for a rise to a level of 0.15. In the previous month, the index had recorded a revised reading of 0.05. Meanwhile, the nation’s Dallas Fed manufacturing business index advanced to a level of 13.1 in February, compared to a reading of 1.0 in the previous month. Market participants had expected the index to record a gain to a level of 4.9.
In the Asian session, at GMT0400, the pair is trading at 1.1363, with the EUR trading slightly higher against the USD from yesterday’s close.
The pair is expected to find support at 1.1344, and a fall through could take it to the next support level of 1.1325. The pair is expected to find its first resistance at 1.1375, and a rise through could take it to the next resistance level of 1.1387.
Looking ahead, traders would keep an eye on Germany’s GfK consumer confidence index for March, scheduled to release in a while. Later in the day, the US housing starts and building permits, both for December, along with the Richmond Fed manufacturing index and the consumer confidence index, both for February, will garner significant amount of investors’ attention. Additionally, Fed Chairman Jerome Powell’s testimony, slated to release later in the day, will garner significant amount of investor attention.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
British Pound Trading Higher In The Morning Session
For the 24 hours to 23:00 GMT, the GBP rose 0.40% against the USD and closed at 1.3120, amid news that the British Prime Minister, Theresa May delayed a parliamentary vote on her Brexit deal.
In the Asian session, at GMT0400, the pair is trading at 1.3139, with the GBP trading 0.14% higher against the USD from yesterday’s close.
The pair is expected to find support at 1.3077, and a fall through could take it to the next support level of 1.3016. The pair is expected to find its first resistance at 1.3174, and a rise through could take it to the next resistance level of 1.3210.
Trading trend in the Sterling today, is expected to be determined by UK’s BBA mortgage approvals for January, set to release in a few hours.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Japan’s Leading Index Declined More-Than-Estimated In December
For the 24 hours to 23:00 GMT, the USD rose 0.41% against the JPY and closed at 111.07.
In economic news, Japan's final coincident index slid to a level of 101.8 in December, following a level of 102.9 in the prior month. The preliminary figures had recorded a drop to 102.3. Moreover, the nation's final leading economic index declined to a level of 97.5 in December, compared to a reading of 99.1 in the prior month. The preliminary figures had indicated the index to fall to a level of 97.9.
In the Asian session, at GMT0400, the pair is trading at 110.80, with the USD trading 0.24% lower against the JPY from yesterday's close.
The pair is expected to find support at 110.51, and a fall through could take it to the next support level of 110.21. The pair is expected to find its first resistance at 111.17, and a rise through could take it to the next resistance level of 111.53.
In absence of key economic releases in Japan today, investor sentiment would be determined by global macroeconomic events.
The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.
Swiss Franc Reverses Its Losses In The Asian Session
For the 24 hours to 23:00 GMT, the USD rose 0.10% against the CHF and closed at 1.0005.
On the macro front, Switzerland’s total sight deposits rose to a level of CHF576.5 billion in the week ended 22 February 2019, from CHF576.3 billion in the previous week.
In the Asian session, at GMT0400, the pair is trading at 0.9998, with the USD trading 0.07% lower against the CHF from yesterday’s close.
The pair is expected to find support at 0.9983, and a fall through could take it to the next support level of 0.9969. The pair is expected to find its first resistance at 1.0012, and a rise through could take it to the next resistance level of 1.0027.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
Loonie Extends Its Losses In The Morning Session
For the 24 hours to 23:00 GMT, the USD rose 0.37% against the CAD and closed at 1.3187.
In the Asian session, at GMT0400, the pair is trading at 1.3198, with the USD trading 0.08% higher against the CAD from yesterday’s close.
The pair is expected to find support at 1.3140, and a fall through could take it to the next support level of 1.3082. The pair is expected to find its first resistance at 1.3229, and a rise through could take it to the next resistance level of 1.3260.
Amid lack of economic releases in Canada today, traders would focus on global macroeconomic events for further direction.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
Aussie Reverses Its Gains In The Asian Session
For the 24 hours to 23:00 GMT, the AUD rose 0.43% against the USD and closed at 0.7169.
LME Copper prices rose 1.5% or $75.0/MT to $6564.0/MT. Aluminium prices declined 0.2% or $4.5/MT to $1886.0/MT.
In the Asian session, at GMT0400, the pair is trading at 0.7160, with the AUD trading 0.13% lower against the USD from yesterday’s close.
The pair is expected to find support at 0.7137, and a fall through could take it to the next support level of 0.7115. The pair is expected to find its first resistance at 0.7183, and a rise through could take it to the next resistance level of 0.7207.
The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average
Gold: Yellow Metal Trading Higher In The Morning Session
For the 24 hours to 23:00 GMT, Gold declined 0.30% against the USD and closed at USD1329.70 per ounce, amid gains in global equities, following progress in US-China trade war.
In the Asian session, at GMT0400, the pair is trading at 1331.00, with gold trading 0.10% higher against the USD from yesterday’s close.
The pair is expected to find support at 1327.23, and a fall through could take it to the next support level of 1323.47. The pair is expected to find its first resistance at 1334.83, and a rise through could take it to the next resistance level of 1338.67.
The yellow metal is showing convergence with its 20 Hr and 50 Hr moving averages.
Silver: White Metal Trading On A Stronger Footing This Morning
For the 24 hours to 23:00 GMT, Silver declined 0.56% against the USD and closed at USD15.94 per ounce, tracking losses in gold prices.
In the Asian session, at GMT0400, the pair is trading at 15.97, with silver trading 0.19% higher against the USD from yesterday’s close.
The pair is expected to find support at 15.89, and a fall through could take it to the next support level of 15.82. The pair is expected to find its first resistance at 16.05, and a rise through could take it to the next resistance level of 16.13.
The white metal is showing convergence with its 20 Hr and 50 Hr moving averages.
