Sentiment has been weak to start the first full trading week of March, after the run of global positivity following Trump’s address last week, markets then stalled into the weekend and this morning sentiment remains off last week highs. In Europe, the slide started with the banking sector as Deutsche Bank stock dropped on plans of a share sale and a cash call, the indebted lender has been struggling for several years and despite several large restructuring attempts still appears to be under pressure. Across Europe stocks traded lower. In France, news former PM Alan Juppe would not be running for the presidency to replace the embattled Fillon who received party support, knocked the Euro and Eurozone sentiment, while the popularity of the far right nationalist Le Pen grew, with polls suggesting Marcron’s lead is narrowing.
The Euro dropped from highs against the USD and GBP as that news emerged. EURUSD has failed to recover above 1.0600, while a weaker GBP has helped EURGBP to highs above .8675. In the USD, major indices closed lower, likely led by profit taking rather than a broad reversal of sentiment. US President Trump re-instated his travel ban, while elsewhere US data was firmer than expected, all helping the USD to trade higher on the day, the trade weighted USD index up almost .5% from the lows earlier in the morning. In the Asian session overnight, stocks also traded lower following the global lead of weaker stocks with a mix of geopolitical tension thrown in for good measure following North Korean missile launches over the weekend.
GBP has dropped to fresh 7 week lows against the USD, while GBPEUR is touching 6 week lows ahead of tomorrow’s budget, while Brexit and Article 50 chatter continues. On the data front, weaker than expected house price data from Halifax also knocked the pound this morning. Most are focused on tomorrow’s budget and comments from the Chancellor suggesting he would be “keeping reserves in the tank” to assist the economy through the impending Brexit have not be well received by GBP.
1.2080 area offers key support for GBPUSD over the coming days, a break below there will break to the downside, a flag pattern in place since last October’s flash crash lows and the Jan lows, as well as previous supports zones through October to Jan. EURGBP has resistance towards .8730/40, a break above there will favour progression towards highs from .8860 to .9000.
All quiet on the data front from the US later with only the trade balance due, while Europe the finalised GDP figures for Q4 ’16 are due, but unlikely to offer up any great shocks. 1.0640/30 zone offers opportunity for sellers of EURUSD, 1.0575 offers support around yesterday’s lows but that is light and once again 1.0500/35 area is where buyers have emerged in the past. That’s the range for now and we’ll need a break either side for things to change.