Archives of “October 11, 2019” day

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GBPJPY is the biggest mover today. Soars toward 2019 midpoint/200 day MA

  
Analysis, Forex
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After an early ping pong pause at target levels, the pair shot higher.

In a post yesterday (on other GBP pairs technicals) I outlined levels of importance for the pair after the sharp moves higher.   Below is the chart from that post.
After an early ping pong pause at target levels, the pair shot higher.

At the end of yesterday and into the Asian session, the price of the pair ping-ponged between the 134.60 level above and the 133.86-99 level below.  The price based one last time at the support area (yellow area), broke above the 134.60 level and did not look back.  This is what that looked like:

GBPJPY on the hourly
What now?
Taking a broader look at the daily chart, the pair has moved above swing levels and currently is testing the 50% retracement of the 2019 trading range at the 137.702 level. The price is also trading at the highest level since June 2019.  There is some pause around the midpoint. However, the buyers still remain in control, and the lure of the 200 day above at 138.588, may be the magnet target for the move.
GBPJPY on the daily
The GBPJPY is getting a double boost from hope for Brexit and hope from US/China (that is propelling stocks and yields higher).  That is the right cocktail for the explosive currency pair.

European shares end the day (and the week) with solid gains

  
Analysis, Global Indices
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Global hope on Brexit and a US/China deal

The major European indices are ending the day (and the week) with solid gains. The provisional closes are showing:
  • German DAX, up 2.7%. That is the best day cents January 4
  • France’s CAC, up 1.7%
  • UK’s FTSE, up 0.7%
  • Spain’s Ibex, up 1.7%
  • Italy’s FTSE MIB, up 1.8%
For the week, the major indices are also ending with decent games.  Provisional changes for the week are showing:
  • German DAX, +4.1%
  • France’s CAC, +3.2%
  • UK’s FTSE, +1.22%
  • Spain’s Ibex, +3.28%
  • Italy’s FTSE MIB, +3.1%

In the European debt market, the benchmark 10 year yields are mostly higher with UK yields soaring by 12.1 basis points on hopes for a Brexit deal.

UK yields have soared by 12.1 basis points today
Looking at the yield chart for the 10 year in the UK, the yield moved above its 100 day moving average today for the 1st time since little looks above in April and May (that failed).  The last extended time above the 100 day MA was back in November 2018 (at much higher levels).
The UK 10 year yield

China is offering to completely remove the requirement for forced joint ventures by Jan

  
  Analysis
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Fox Business report

From Fox’s Edward Lawrence:
China is offering to completely remove the requirement for forced joint ventures by Jan 2020. The Chinese would like to see if further tariffs could be suspended or rolled back. We will see if that is enough for the US Trade Team

China set to remove ownership cap on financial firms starting next year

  
  Analysis
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This could be in part what is helping stocks to rally further

The Chinese Securities and Regulatory Commission has announced that they will scrap foreign ownership limit on futures companies starting from 1 January 2020.

Meanwhile, they will also remove the foreign ownership limit on fund management firms from 1 April 2020 and a similar cap on securities companies from 1 December 2020.
This is part of the opening up process and is welcome news for risk even if it comes at a time when markets are waiting on the outcome of trade talks.

The bond market isn’t feeling too upbeat on trade talks

  
  Analysis
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Treasury yields fall across the curve to session lows

USGG10YR

10-year yields are down by 2.5 bps to 1.644% as yields slip across the curve to start the European morning. While equities are holding higher, the bond market is sending a different signal with regards to positioning ahead of the trade talks outcome.
Essentially, this is what is holding yen pairs back from moving higher on the day with USD/JPY still seen near flat levels at 108.00.
Markets are mixed and a bit paralysed at the moment as everyone is just waiting to see what happens to talks in Washington later today. I reckon that will remain the case ahead of North American trading before we get more trade headlines to work with.

Economic data coming up in the European session

  
  Analysis

ata to continue to play second fiddle to trade talks and Brexit headlines

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Happy Friday, everyone! Hope you’re all doing well as we look to get things going in the session ahead. It’s been a calmer start to the day as markets are holding out optimism on trade talks in Washington and that has been the main theme playing out so far.

However, the pound was the standout performer in overnight trading after Brexit talks between UK PM Johnson and Irish PM Varadkar overshadowed the main focus of US-China trade talks. Cable holds above 1.2400 still on optimism of a watered-down Brexit deal.
Needless to say, I still reserve some skepticism over the matter because if this is what it boils down to, then why didn’t they just get on with it during Theresa May’s tenure rather than waste everyone’s time for the past year or so?
Looking ahead, it’s still all about the mood surrounding trade talks as Trump will be meeting with Liu He later on in the day. As such, trade headlines will continue to be the key factor driving trading sentiment as we look to wrap up the week.
0600 GMT – Germany September final CPI figures
The preliminary report can be found here. As this is the final release, it isn’t going to offer much of anything new unless the figures deviate substantially from initial estimates.
0700 GMT – Spain September final CPI figures
Much like the above, as this is the final release, it isn’t going to offer much of anything new unless the figures deviate substantially from initial estimates.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!

BREAKING : Explosion reported in an Iranian tanker near Jeddah

  
  Analysis
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ISNA reports, via Reuters

The headlines say that there has been an explosion in a tanker that has set the vessel (owned by the National Iranian Oil Company) on fire near the Saudi port city of Jeddah.

The explosion is said to have caused heavy damages to the vessel and oil is spilling into the Red Sea. The media outlet is still saying that the event is under investigation but “experts” say that it may be a terrorist attack.
Just one to keep an eye on for oil in case things escalate any further or if there is more to the story above.

Here is what a US-China ‘currency pact’ would mean for the dollar and the yuan

  
  Analysis
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Morgan Stanley (this via Bloomberg) say a pact is likely to weaken the USD and strengthen the Chinese yuan.

Well, yeah.
More:
  • could lead to broad based USD weakness, especially benefitting China-proxy currencies
  • yield curves would get steeper
  • yen would weaken
MS say it’d be a ‘Plaza Accord’ lite.
A bit of a summary if its of interest.
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