Daily Market Commentary

Tuesday, 24 January 2017 - Market Commentary

Alex Hartley

United States Dollar

US dollar weakness seems to be the theme across the board. As there was little in the way of domestic data yesterday, on both sides of the pond, movement was dictated by the previous day’s news. The trump trade continued to unravel from Friday as his protectionist America First rhetoric continues to weigh heavy on the Greenback. As little has been worded to comfort those that supported the pre-election growth promises from the Republicans, eyes now turn to the first 100 days under Donald Trumps presidency. Cable reached an overnight high of 1.2543, but has since slipped back below 1.2500 for today’s start. GBP/USD 1.1624 – 9:00am.

Tuesday offers more to investors and the markets as we await the EU membership court ruling at 9:30am. The result could see whether Brexit will have a final vote from parliament, despite it not possibly changing the outcome. If not, article 50 could be triggered by the government without the need for parliamentary debate. The outcome will likely add volatility to the ascending GBP/USD.

We expect a range today in the GBP/USD 1.2380 to 1.2680

Euro

The single currency traded in tight ranges against the GBP and USD yesterday. As there is nothing to report from Draghi’s address at an awards ceremony in Italy yesterday, there leaves little to discuss on the data front. Trump rules the headlines for EUR/USD as a weaker dollar has helped the EUR scrape itself against the recently achieved lows for the currency pair. Uncertainty surrounding the new presidency and whether policies will be met by republicans meant EUR/USD peaked at 1.0772 around 10:45pm last night. On the 16/01/20017 GBP/EUR had been testing 1.1300, but gains since has taken the pair back above 1.1600, reaching 1.1652 overnight. GBP/EUR 1.2494 – 9:00am.

There will be more to comment on in tomorrow’s commentary as we will see the outcome to the Brexit court ruling. Jitters amongst investors will likely be seen around the result, which should add volatility to GBP and EUR respectively.

We expect a range today in the GBP/EUR rate of 1.1490 to 1.1760

Aussie and Kiwi Dollars

The Aussie and Kiwi continue to lose ground on Sterling. GBP/AUD pushed back up to two week highs reaching 1.6530 overnight and GBP/NZD waved from a high of 1.4949 to a low of 1.4834. Despite the pending UK release this morning deciding on whether the Brexit will go under parliamentary debate, overnight tonight we await Australian CPI figures. A primary gauge of consumer prices tends to create a hefty market impact, especially if the figures are off forecast. The past 5 releases have seen 3 off forecast, which makes the release one to watch if you have exposure to the antipodean crosses. GBP/AUD 1.6509 and GBP/NZD 1.7280 – 9:00am.

We expect a range today in the GBP/AUD rate of 1.6280 to 1.6820

We expect a range today in the GBP/NZD rate of 1.7090 to 1.7570

Data Releases

AUD: No data releases due for today

EUR: German, French and European manufacturing and services PMI

GBP: EU membership court ruling, public sector net borrowing

NZD: No data releases due for today

USD: Existing home sales

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