European FX news 22 January
- Infograph on global GDP figures.
- EU on Polish sunset clause proposal for Brexit
- Nasdaq futures down as European indices stay suppressed
- US Shutdown at day 32 as Democrats vow to reject Trump offer
- Currency snapshot: GBP strongest against the USD after wages data
- Zew says negative factors on Brexit, financial markets and weak China growth already expected
- EU's Moscovici quiet on lower Italian growth forecast by IMG
- Germany January ZEW survey current situation 27.6 vs 43.0 expected
- UK November average weekly earnings 3.4% vs +3.3% 3m/y expected
- GBPUSD turns positive on the day prior to weekly earnings data
- China's Tianjin on the wires regarding Tesla batteries
- One hour until average weekly earnings, GBPUSD held by 200EMA on 1 hour
- Trade ideas thread - European session 22 January 2019
- European Indices open down on risk wobble from Asian session
- GBPUSD reacting off 100EMA on 1 hour chart ahead of earnings data
- China foreign ministry asked about retaliation for Huawei executive Meng
- European futures down as risk filters into European session
- Shanghai Composite close down -1.2%, China's .CSI300 down -1.3%
- Italy's Growth forecast for 2019 cut to around 0.6%
- Recap of yesterday's chart in focus: EURCAD shorts
- Germany's Barley says UK will always be close partner
- UK referendum would take a year to organise
- Looking at the longer pattern of China's slowdown in growth
- Currency snapshot entering the European session.
- Key economic data ahead for the European session
Markets
- FTSE 100 down -0.74%
- DAX down -0.53%
- US Oil +3.32%
The session started with, as Eamonn put it, a risk 'wobble'. There was JPY and USD strength on the Huawei controversy which was seen as an extension of the US and China trade war/dispute.As an aside, the focus there now is on Intellectual Property.
JPY and USD strength carried onto the session , but the market was generally subdued without very strong direction anywhere aside from perhaps AUD weakness. The commodity currencies suffered in the risk off environment, but dominant JPY strength was replaced during the session by GBP strength. At the end of the session above JPY, CHF and USD were strongest as the traditional safe haven trio came to the ascendancy.
Techincally the GBPUSD was contained by the 200EMA on the 1hour chart . It was bid strongly, and suspiciously, into the strong data release, turning positive on the day just prior to the release. I read this a key tell for a good data release, as we need to remember how widely spread the GBP data releases are. It was as if someone knew the release before the time ;-). However, to be less conspiratorial, the data was expected to be very good and many folks (myself included) could have been 'buying the rumour and selling the fact' into the event. The data was strong and average earnings were at 3.4%- the highest since July 2008.
ZEW data out was also showing a further drop in confidence, which was largely anticipated with Brexit woes, China slowdown in growth and a wider euro slowdown. Focus will now be on the PPI releases on Thursday just prior to the ECB's monetary policy statement.
There was a noticeable shift today as the good data out of the UK was bid. Previously, it had been sold on Brexit worries. Now the risk of a no-deal has receded somewhat the market is once again, for now focusing on the data. However, headline risk very much remains, but my view is that extreme volatility is less likely in current circumstances. Although, any prospect of a no-deal re-emerging would negate that view.
The Huawei case led to a fall in Asian equites that fed into the European session. European indices are down in the red approaching the close of the London morning session and the US futures looks like following the Asian and European examples into the red. That tone looks set to continue as the Huawei issue is regarding Intellectual property; the heart of the US China trade dispute
- Nasdaq futures down -0.9%
- S&P 500 futures down about -0.7%
- Dow futures down about -0.6%
