Currency Feed – Tuesday 19th September

Pound drops 1% on Carney Comments Mark Carney caught the market off guard yesterday afternoon with some slightly dovish comments at his annual Camdessus lecture at the International Monetary Fund in Washington. Carney also commented on Brexit, stating that it was a unique example of “deglobalisation” that will hurt Britain’s economy as trade ties with […]

19th September 2017 | Miles Eakers

Pound drops 1% on Carney Comments

Mark Carney caught the market off guard yesterday afternoon with some slightly dovish comments at his annual Camdessus lecture at the International Monetary Fund in Washington. Carney also commented on Brexit, stating that it was a unique example of “deglobalisation” that will hurt Britain’s economy as trade ties with the EU are weakened. The Pound dropped to session lows of $1.3475 on the comments before recovering some its losses.

In European data released yesterday, inflation levels in the Eurozone remain in line with last month’s release. Coming in at 1.5%, also in line with economist’s forecasts, there is a growing view that the ECB will be lining up to follow the recent moves by the Bank of England and Royal Bank of Canada and begin tightening monetary policy.

The market focus shifts to the Federal Reserve this Wednesday evening and its plans to reduce the size of its gargantuan balance sheet. The Fed is expected to leave short-term interest rates unchanged in the 1-1.25 per cent bound while signalling the start of a multiyear process of paring back its $4.5tn balance sheet.

Stock markets in the US reached another record high yesterday with the S&P gaining 0.2% to a second successive record close, at 2,503 after touching a record high of 2,508.32. The momentum failed to continue through in to Asian markets overnight with moves in stocks muted. Oil prices were also unmoved at $55.99.

EUR/USD $1.1975 (+$0.0023)

EUR/USD opened in Asia at $1.1951 towards the upper end of Monday’s range. We began the session on the back foot, falling to today’s low of $1.1928. The pair found support as the session wore on, rising to today’s high of $1.1979. The market is still around the highs as we approach the European open, trading at $1.1975. From a technical view, Friday’s high of 1.1986 forms our first resistance level ahead of Wednesday’s high of 1.1994. On the downside, yesterday’s low of at $1.1913 and Friday’s low at $1.1899 are in focus.

GBP/USD $1.3536 (+$0.0044)

Cable opened in Asia at $1.3494 towards the lower end of Monday’s range. We began the session on the back foot, seeing a slight drop to today’s low of $1.3490. The pair found support as the session wore on, rising to today’s high of $1.3538. The market is still trading around the highs as we approach the European open at $1.3536. In terms of technical, yesterday’s high of $1.3618 is our first resistance level ahead of the June 24th 2016 (Brexit Referendum) closing level of $1.3678. On the downside, yesterday’s low at $1.3463 may offer some support ahead of last Thursday’s high at $1.3405.

USD/JPY ¥111.73 (+¥0.17)

USD/JPY opened in Asia at ¥111.55 towards the upper end of Monday’s range. We began the session on the back foot falling to today’s low of ¥111.36. The pair have since found support and set a fresh high of ¥111.73 as we head in to the European open. From a technical view, the July 27th high of ¥112.18 forms our first resistance level ahead of the 13th July and 6th July lows of ¥112.85/112.87. On the downside, yesterday’s low at ¥110.87 and Friday’s low at ¥109.54 are in focus.

GBP/EUR €1.1299 (+€0.0014)

GBP/EUR opened in Asia at €1.1285 at today’s low and towards the lower end of Monday’s range. The market has traded in a narrow range throughout the session with the pair setting today’s high of €1.1305. The market has slightly eased off the highs as we approach the European open, trading at €1.1299. From a technical view, Friday’s low at €1.1223 may offer some support followed by last Tuesday’s high at €1.1131. On the upside, yesterday’s high at €1.1390 and the July 14th high of €1.1436 are in focus.

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