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AETOS Market Commentary 15/02/2019

AETOS Capital Group


The Euro rose to 1.1294(+30 pips) against the greenback on Thursday. The greenback strengthened provisionally. On the data front, the European data that was released was varied yet overall unpromising, confirming the economic slowdown in the Union as Germany GDP stood pat in Q4, according to preliminary estimates. For the whole EU, growth reached 0.3% in the three months to December, better than the 0.2% expected. US figures were quite disappointing, the reason why the greenback was unable to extend its rally to fresh highs. Retail Sales were down by 1.2% in December, missing the market's expectation of 0.2%, while the core reading declined 1.7% vs. a 0.4% advance expected. Weekly unemployment claims were sharply up last week, reaching 239K. The dollar fell with the news, recovering later on headlines indicating that there hasn't been progress in US-China trade talks. The dollar remains intrinsically bullish ahead of the last trading day of the week, which will bring some minor releases from the EU, being the most relevant December Trade Balance, while the US will release among other less relevant reports, January Industrial Production and the preliminary Michigan Consumer Sentiment Index for February, foreseen at 93.0 vs. 91.2 in January.


The Pound tumbled to 1.2795(-54 pips) against the greenback on Thursday. The cable pair was once again the worst performer, falling against the greenback to 1.2772, its lowest since Jan 15, ahead of another round of Parliamentary votes. The Sterling dived after the pro-Brexit ERG group was said to abstain from supporting PM May's indicative vote over what the next steps should be and reaffirm support for the PM. Three different amendments were submitted, all of them rejected, as expected. The outcome is Pound-negative as the internal division weakens May's capacity to negotiate with the EU. The GBP/USD pair, however, held around 1.2800 following the vote, as the greenback weakened following JP Morgan's decision of cutting the Fed rate forecast by 25 bps. The UK will release this Friday, January Retail Sales, expected to have risen by 0.2% MoM and by 3.4% YoY.

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