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AETOS Market Commentary 13/03/2019

AETOS Capital Group

EURUSD

The Euro strengthened on Tuesday, closing at 1.1289(+31 pips) against the greenback.

The euro dollar pair continues to retrace the sharp selloff following the European Central Bank (ECB) meeting as U.S. data prints point to a slowing a economy, and the exchange rate may stage a larger rebound over the coming days as it initiates a string of higher highs & lows.

The most traded paired were going back and forth between gains and losses during the first half of the day amid the absence of relevant macroeconomic data coming from the Union, rather following the lead of Pound, which was quite volatile ahead of the UK Parliamentary vote on PM May's deal that took place by the end of the day.

The dollar came under selling pressure after US inflation cooled more than expected in February, as the core CPI, which excludes volatile food and energy prices, rose a measly 0.1% MoM, printing 2.1% when compared to a year earlier. This Wednesday, the EU will release January PPI, seen up 1.0% MoM and -2.1% YoY, while the US will also release producer prices, seen increasing by 0.2% MoM and by 1.9% YoY in February.

More relevant, the world's largest economy will publish January Durable Goods Orders, seen down in January by 0.5% after adding 1.2% in December.

EURUSD 4 Hour Chart

13-03-2019

Based on the chart above, the pair heads into the Asian opening just a couple of pips below the 50% retracement of its latest decline at 1.1300, an immediate resistance.

In the 4 hours chart, the 20 SMA(Red Line) losses its bearish slope, now converging with the 23.6% retracement of the same decline at around 1.1235, while technical indicators aim to resume their advances after a brief consolidation at March highs, supporting a continued advance for the upcoming sessions.

A break through the 61.8% retracement of the same decline at 1.1330, would make of the bullish case a stronger one.

GBPUSD

The Cable pair tumbled on Tuesday, closing at 1.3074(-170 pips) against the greenback.

GBP selling pressure mounted in response as markets priced in lower odds of the withdrawal agreement garnering enough support for today’s vote. In light of this, traders were likely unsurprised by the huge price swings experienced over the last 24 hours seeing that GBPUSD overnight implied volatility skyrocketed to its highest level since June 2017 leading up to today’s second meaningful vote.

Also worth mentioning is commentary from the PM's spokeswoman who stated after the vote that Theresa May has not discussed resigning from her position.

The spokeswoman added that the EU has sent a clear message they do not intend on negotiating further over the Irish backstop, but this is notwithstanding the EU's openness to considering 'reasoned requests' from the UK to delay Brexit.

The financial world gyrated around the Pound this Tuesday, with the GBP/USD pair soaring to 1.3289 at the beginning of the day after UK PM May said that she secured legally binding changes to the Brexit deal with EU's Juncker in a late meeting Monday. The pair collapsed later to 1.3004, as the UK's Attorney General Cox said that the legal risk remains unchanged that the UK will have no lawful means of leaving the Irish Backstop arrangement. Also, the European Research Group’s lawyers have rejected May’s latest Brexit proposals.

The main concern of lawmakers is to remain trapped in the backstop forever, unable to leave the customs union once the transition period ends in 2020. The UK Parliament rejected May's deal by 391-242 votes, giving the Pound a modest boost, as it opens doors for an extension.

The UK Parliament will decide next to vote on leaving without a deal, and later this week, on an extension of the departure date.

The Pound advanced above 1.3100 after the vote but gave back on headlines indicating that an EU spokesman said that they need a credible justification for a delay on the departure date, also the length of such a delay.

GBPUSD Daily Chart

13-03-2019-2

The pair currently will be influenced mainly on Brexit news. Following the sharp reversal yesterday, bull traders are now eyeing a move towards the YTD peak (1.3350).

Support and resistance set to 1.2963 and 1.3287.

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The information above is of general nature only and does not take into consideration your objectives, financial situation or investment needs. The products and services provided are issued by AETOS Capital Group Pty. Ltd. (AFSL: 313016, ACN: 125113117). Trading Forex margin and CFDs carries a high level of risk, and losses can exceed your deposits. You are strongly recommended to seek independent financial advice before you make an investment decision. Please refer to our Product Disclosure Statement which you can obtain from our website for more details. AETOS has the ownership of the contents of this FX commentary. Copying, reprinting or publishing to a third party is not permitted.

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