Yesterday’s market action proved to be exactly what it looked like in the morning, a long slow grind with low volume traded in global markets. The most notable move was in GBP which faced selling through the day following comments from Fox that we highlighted yesterday. We’ve said it before and we’ll say it again, the harder the Brexit the worse the outlook for GBP and while Brexiteers shout “no deal is better than a bad deal” the market is certainly pricing a no deal as the worst outcome. GBPUSD now down over 1.5% from Thursday’s BOE rate hike, EURGBP is up almost 1% as a result of the pounds weakness. Another interesting piece of action to note was that someone out there was buying up US treasuries, usually a sign of some risk aversion and while broader volumes being traded were still subdued, this was somewhat against the grain considering stocks traded higher and there was no obvious risk off moves at play. Perhaps someone knows something we don’t but again summer markets can create moves on very low activity.
Overnight the RBA had a policy meeting and on a quick glance they just used the old copy and paste button. They kept rates on hold at 1.5% and felt their policy was consistent with projections and strategy. Nothing to see here basically, AUDUSD is slightly firmer this morning but that’s more to do with the weaker USD. Some slight dollar selling so far today, thus far we’ve erased yesterday’s gains and the USD index now trades lower on the week so it will be an interesting watch. Not much expected again from this morning’s data and another quiet day in store. That leaves us headline watching and Brexit, tariffs, trade wars and Trump in general have been the biggest market movers this year.
Otherwise major ranges remain in play, EURUSD traded back below 1.1550 yesterday but still fell short of dropping back below the key 1.1500 area. 1.1610/20 area should provide some near term resistance. EURGBP still looking at .8960 for upside resistance higher and .9030 is the real line in the sand above that, .8880 offering some support lower. GBPUSD found some support ahead of 1.2900 yesterday (lows of 1.2925), the 1.2900 area is a decent technical support level not surprising to see a small bounce once some buyers protected it. That being said GBP remains vulnerable and if anything it’s a slight bout of USD weakness that has saved it today. 1.3000 provides first resistance to moves higher and 1.3044 above that.