Archives of “April 11, 2019” day

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AUD/USD breakout turns into a fakeout

  
Analysis, Forex

Rally to six week high yesterday erased

Rally to six week high yesterday erased
AUD/USD has completely erased yesterday’s gain in a 50-pip fall to 0.7124 today. It’s a disheartening turn after the pair hit the highest since February 26 a day ago.
The failure to hold and close above 0.7168 underscores resistance there but on the downside there is uptrend support at 0.7075 and the April low of 0.7053.
Like so many trades in FX right, the range is dominating and we sit and wait for a break.

European shares end mostly higher

  
Analysis, Global Indices

France’s CAC leads the way. UK FTSE lags

The European markets are closed and are ending with mostly gains.
  • German Dax, +0.26%
  • France’s CAC, +0.66%
  • UK’s FTSE,. -0.03%.
  • Spain’s Ibex +0.44%
  • Italy’s FTSE MIB +0.16%
In the US, major indices are near unchanged levels:
  • Dow is up 8.56 points or +0.03% at 26165.72
  • S&P is up 0.77 points or +0.03% at 2888.98
  • Nasdaq is down -6.47 points or -0.08% at 7957.76

What happens now as Brexit day gets extended (again) to 31 October?

  
  Analysis

Danske Bank says a further extension is likely but it’s hard to back any one scenario to be a winner given current circumstances

Brexith/t @ RANSquawk for the picture

And I certainly don’t disagree with Danske on that front. As it stands, there just isn’t a clear solution to break the Brexit impasse and there isn’t any clear way forward as long as May remains prime minister.
For the moment, UK lawmakers will be set for a break in conjunction with Easter next week from 16 April to 23 April so I would expect any steps forward in the Brexit saga to only come about after that.
The real issue with European leaders allowing an extension to Halloween Day is that it just solidifies the notion that all parties are wanting to avoid a no-deal and that they will extend this for as long as it takes to find a majority on something else. And that means another possible extension if we’re still stuck down this same road in six months’ time.
In the mean time, May is continuing to pursue cross-party talks but with Labour unlikely to move their red lines, she either has to cave in and lean towards a customs union or try and work on her original deal again for a third time.
The latter option is likely to draw heavier scrutiny this time around as it was dead on arrival already in the past two attempts, which means if talks with Labour fail, we could be seeing the end of May’s reign as prime minister.
In the bigger picture, the problem with rolling extensions is that eventually this is going to take a toll on the UK economy in a really, really expensive way. That’s when lawmakers will have to question “where do we draw the line?”. I reckon that is where potentially a second referendum and calls to revoke Article 50 altogether will come into play.
Otherwise, the UK risks economic suicide if it continues to play this game of limbo with no clear way to successfully make it to the other side.

Eurostoxx futures flat in early European trading

  
Analysis, Global Indices

Sluggish tones observed in early trades

  • German DAX futures -0.1%
  • French CAC 40 futures +0.2%
  • UK FTSE futures -0.1%
  • Spanish IBEX futures +0.1%
This very much feeds into the indecisive/mixed tones seen in Asian trading but the magnitude of the moves reflects that of US equity futures, which are trading flat, for now. The tone here is helping to keep currencies steady with USD/JPY near unchanged levels at 111.07.

Nikkei 225 closes higher by 0.11% at 21,711.38

  
Analysis, Global Indices

Tokyo’s main index closes slightly higher in mixed session for Asian equities

Asian equities are wrapping up the session in mixed fashion as Japanese stocks post gains while Chinese stocks are lagging on the day. The Hang Seng index is down by 0.8% currently as softer tones due to global growth worries are prevailing among Chinese equity investors.

That said, overall risk sentiment remains more balanced with US equity futures barely changed on the day and bond yields also not really moving as we begin the European morning. That should keep yen pairs generally stable to start the session with USD/JPY still holding near unchanged levels at 111.07 currently.

IMF says that undermining central bank independence would be dangerous

  
  Analysis

IMF’s Tobias Adrian, speaks in relation to Trump’s recent criticism of the Fed

Trump Fed
  • The Fed is set up as a very independent institution
  • ‘Dangerous’ consequences if Trump’s calls lead to monetary policy mistakes
  • Says that IMF is in support of Fed’s current policy stance
  • Investors should take recent yield curve inversion seriously
The only thing that strikes my mind when it comes to this issue is that Trump’s criticism may inadvertently force the Fed to be less independent in order to prove their independence. It sounds convoluted but if Fed officials are upset by getting pushed by the guy in the Oval Office, they may very well just stick to their guns despite the US economy starting to send warning signals in recent months.

Five Fed officials on the speaking agenda Thursday

  
  Analysis

  • Federal Reserve System Vice Chair Richard Clarida is speaking on the U.S. Economic Outlook and Monetary Policy, so that will contain pertinent remarks.

  • New York Fed head John Williams is to speak at a housing development conference
  • Michelle
  • Michelle Bowman is a Governor on the Federal Reserve board, speaking in San Francisco
  • James Bullard is the president of the St. Louis Fed.
  • Neel Kashkari, Fed chief, is conducting a Twitter Q&A
Packed agenda!
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