ALPHA Market Update 15 January 2019

15.01.2019

Market Update

 

 

 

United States

  • Trade Balance and PPI will be released at 13:30
  • Three heavy articles from the mainstream media have once again focused public attention on the “Russiagate” last weekend. The spearheads of these articles are directed at President Trump, and he continues to respond and shout in front of the media and the public. Trump officially clarified on Monday that he had never “worked” for Russia, and rebuked reporters who used scams to humiliate people.

United Kingdom

  • Theresa May is expecting to lose tonight’s vote in the worst defeat in parliament in 95 years, the marker is a loss of 100 votes, a loss above or below this majority level is seen to be significant, but it could be as high as 225 (absolute worst case scenario) in which case we could easily break 1.24 and go as low as 1.20 and potentially trigger general election as she has clearly lost her grip on power. as of now 112 vs 128 Tory MPs have said they would reject vs support her deal based on public statements; however this may change given the inner workings of the parties and whips.
  • With tonight’s vote, major banks are expecting a +-10% swing in GBPUSD following the vote result, GBPUSD has been strong in 2019, however, this is mainly because the focus has been off of Brexit and onto the more dovish FED.

Europe

  • The EU published an exchange of letters with Theresa May containing reassurances about the Brexit Withdrawal Agreement, but not changes to the deal. The EU can’t offer guarantees, but in the letter from Commission President Jean-Claude Juncker and Council President Donald Tusk, it is hoping to convince British MPs that the “backstop” really is an emergency — and temporary step — to be triggered only in the absence of a broader deal on future relations. In the letter, they warn they cannot offer any new binding guarantees.

Australia & New Zealand

  • AUD has been boosted by reports suggesting the Chinese government will cut taxes on a larger scale than previously thought in order to support the economy, which has fuelled support for so-called risk assets.
  • Officials from the central bank and finance ministry told reporters Tuesday that long-mooted tax cuts will now be on a “larger scale” and that they will target small businesses as well as the manufacturing sector, according to a report from The South China Morning Post.
  • “After yesterday’s awful Chinese trade data, this morning brings promises of further tax cuts and a bounce in sentiment that sent all Asian equity indices higher, and dragged the yen to the bottom of the overnight FX rankings,” says Kit Juckes, chief FX strategist at Societe Generale.
  • The move comes as analyst forecasts of an economic slowdown in China during 2019 grow in number and barely a day after trade balance data showed Chinese companies and consumers struggling beneath the weight of White House trade tariffs in December.
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