Sterling rallies ahead of key May-Juncker meeting

KBC Market Research Desk KBC Bank

Yesterday, EUR/USD rebounded further. If anything, headlines were euro negative rather than positive. Italian production and order data were again weak. ZEW German confidence was mixed and ECB members did speak soft. EUR/USD fell briefly below 1.13, but rebounded later. A better risk sentiment dented appetite for the dollar. A rebound of cable maybe also supported EUR/USD. The US NABH housing index rose more than expected but failed to inspire USD bulls. EUR/USD closed at 1.1341 (from 1.1311). Soft BOJ comments initially weighed on the yen, but USD softness finally caused USD/JPY to close little changed at 110.63.

Most Asian equity indices are trading in positive territory with China underperforming. The yuan rallied (USD/CNY 6.7250) on headlines that the US asked China to keep its currency stable as part of the trade talks. The yen (USD/JPY 110.85 area) weakened further on poor Japan foreign trade data. BOJ-Kuroda again suggested that BOJ policy isn’t weakening the yen. Still, recent BOJ-talk on the currency is striking. AUD/USD stabilizes in the upper half of the 0.71 big figure despite (slightly) softer than expected Q4 wage data.

Today, the EC consumer confidence is expected to ease further to -7.7 from -7.9. In the US, markets will look out for the minutes of the Jan 30 Fed meeting. The turn in the Fed’s bias is already well documented. Still, the (FX) market might be slightly more sensitive to dovish accents rather than ‘hawkish’ ones. Headlines on trade and on Brexit remain wildcards.

Last week, disappointing US data capped the USD rebound. EUR/USD rebounded off recent lows, but the picture remains fragile. Progress on global trade issues and better EMU data are needed for a more protracted EUR/USD comeback. There are hopeful signs on trade, but the jury is still out. EUR/USD 1.1216 marks the Nov low. EUR/USD 1.1287 is 61% retracement (2016 low/2018 top). The EUR/USD downside looks a bit more solid versus last week.

Yesterday, sterling showed remarkable strength. EUR/GBP drifted lower throughout the day and close below 0.87. Solid UK labour data helped sterling. At the same time, markets apparently hope that upcoming EU-UK talks might at least avoid a chaotic no-deal Brexit. Today, CBI order data are interesting but probably of second tier significance for GBP-trading. The focus will be on a new ‘crucial’ meeting between EU’s Juncker and UK PM May. It is unsure whether any real progress will be made. At least for now, sterling trading are inclined to see the glass half full rather than half empty. EUR/GBP 0.8621/17 is key MT support.

Download The Full Sunrise Market Commentary Currencies

Author

KBC Market Research Desk

KBC Bank

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.