General market theme
Limited price action in the major instruments at the beginning of the week as the day didn’t offer much in terms of fresh data or news. Investors focused on the UK over the past 24 hours as PM David Cameron announced that he intends to resign until Wednesday after Theresa May was left the only candidate for the job and the pound reacted positively to this development. It is thought that Cameron’s departure and an early change in leadership reduces somehow the uncertainty in the domestic market hence the sterling enjoys some gains against its peers however we need to remind our audience that the bias is still to the downside. As we progress through the week there will be more news coming our way leading up to the US Retail Sales report on Friday so we expect further price action ahead.
Price action highlights
The euro seems to be on a bullish swing higher and the currency is attempting to reach the 1.1100 area this morning on the back of some fresh support received over the past 24 hours. However the 1.1100 resistance level will be a difficult barrier for the euro to overcome, at least without some fresh stimulus or developments that would change the bias in the markets, we believe that the consensus is towards another retest of the 1.1000 support level should the dollar find enough momentum to put the single currency under pressure.
The cable reacted to the upside on the back of the news of Cameron’s departure and the change in party leadership and the pound managed to overcome the 1.3000 level against the dollar. This morning the UK currency is trading around the 1.3080 area having broken above this key resistance but we believe that any relief rally to the upside will be short-lived as there is really nothing to be excited about. As soon as the pound drops below the 1.3000 area short-sellers will look to put it under fresh pressure and a retest of its previous 1.2800 lows seems likely.
Focus of the day
The Economic Calendar is once again empty of any fresh reports today apart from the not so market-moving Wholesale Inventories figures from the US later in the day. However in the morning BoE Governor Carney will be speaking in the Parliament on the domestic market’s Financial Stability and even though we don’t expect to head anything fresh from him we could receive any hints on how the BoE plans to further support the economy, possibly mention a higher rate policy soon.
Disclaimer: The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.