Daily Market News - 16.01.2017 by CentroFX
Pound plunges as hard Brexit reality hits
It was a hectic start to the new trading week in the Asia-Pacific region, with Sterling the main focus. Over the weekend, UK press reported that PM May will announce in her speech tomorrow, a clean break with the EU, including regaining full control over immigration, sovereignty from European Court of Justice decision-making and readiness to exit the customs union. The pound collapsed against the dollar, gapping lower at $1.2085 from a $1.2175 close in New York Friday, the rate extended the drop to $1.1983 before consolidating with a $1.2016-$1.2055 range and was last at $1.2030.
Hard-Brexit fears saw broad-based yen strength, dollar-yen opened at Y114.66 and headed south from the get go, initially basing at Y114.10 the move extended to Y113.98 before recovering mildly and was last at Y114.17. Euro-dollar opened at $1.0617 and traded in a $1.0593 to $1.0636 range, partially filling the gap from the New York close on Friday at $1.0643.
Monday throws up a fairly slow start to what will be a heavy risk event week for the financial markets, as we await UK PM Theresa May's speech outlining her Brexit vision, the ECB policy meeting and the inauguration of US President Donald Trump.US markets are closed to observe the Martin Luther King holiday. The European calendar gets underway at 09:00 GMT, with the release of the final Italian December HICP. At 10:00 GMT, the latest EU trade data will cross the wire. Across the Atlantic, the Canadian CREA home sales data will be released.
The ECB will call for bids on the latest 7-day MRO at 14:40 GMT, before announcing the latest PSPP bond-buying data at 14:50 GMT. At 16:00 GMT, ECB Executive Board member Peter Praet participates in the conference organized by Bank of France, in Paris. At 18:30 GMT, BOE Governor Mark Carney will deliver a keynote speech at the London School of Economics, in London.
BearsHesitation ahead of the key $1.0695 resistance continues and with daily studies approaching O/B and recent topside follow through lacking this is a concern for bulls. Bulls need a close above $1.0695 to end bearish hopes and shift immediate bullish focus to $1.0833-1.0952. Bears continue to look for a close below $1.0553 to shift initial focus back to $1.0453.
Crude Oil futures for Feb'17 delivery last up $0.14 at $52.51 per barrel, after a $52.63 to $52.39 range in Asia today, with the market trading quietly ahead of the Martin Luther King holiday in the US on Monday. Friday saw NYMEX February light sweet crude oil futures settle down $0.64 at $52.37 per barrel, after trading in a $52.27 to $53.17 range.