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AETOS Market Commentary 12/02/2019

AETOS Capital Group Partnership

EURUSD

The euro fell to 1.1276(-47 pips) against the greenback. Monday had minimal data release, neither new headlines related to the political issues that worried speculative interest these last few months.

Equities trade mostly in the green, while government bond yields traded with a soft tone, particularly European ones. EUR/USD decline accelerated once it lost the 1.1300 level, having traded as low as 1.1266.

Today, several Fed's officials will offer speeches, being the most relevant the one from Chief Powell due to deliver a speech titled "Economic Development in High Poverty Rural Communities" at the Hope Enterprise Corporation Rural Policy Forum, in Mississippi. While most of the EUR-complex has been trading largely along the lines of global risk dynamics – the safe haven crosses and commodity crosses are moving in opposite directions – two pairs are still under the sway of significant exogenous influences that could cause them to decouple.

EURGBP, of course, continues to be guided by Brexit (and for that matter, all of the GBP-crosses are in the same boat). Any single development that materially changes the odds of a no deal, ‘hard Brexit’ will dictate outcomes for EURGBP, regardless of whatever is happening with Eurozone economic data. Elsewhere, EURUSD brief reprieve away from US political influences is now over, with another US government shutdown possible at the end of the week and the deadline for the US-China trade war détente in three weeks.

GBPUSD

The Pound fell on Monday, closing at 1.2859(-77 pips) against the greenback. The cable pair temporarily pierced its previous February low of 1.2853 during US trading hours, maintaining the harsh tone ahead of the Asian opening, as the Pound got hit by a batch of negative UK data.

The kingdom released on Monday its preliminary Q4 GDP figures, up by 0.2% QoQ as expected, and by just 1.3% YoY, below the market's forecast of 1.4%. Industrial Production and Manufacturing Production were down in December by 0.9% and 2.1% respectively when compared to a year early, also missing analysts forecasts.

The trade deficit in December widened to £-3.229B vs. the previous £-2.904B. Most of UK jitters are to blame on Brexit, with little over a month for the divorce date and no progress in a deal that can satisfy both parts. The latest in that front indicates that PM May rejected Labour's leader Corbyn proposal of a customs union, while EU's Chief Negotiator Barnier was once again quoted saying that the deal is not open for renegotiations. BOE's Governor Carney is scheduled to speak this Wednesday(13th February) at 00:00 AEST, about the economic outlook and global tensions.

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Source: https://www.aetoscg.com/uk/market-commentary
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