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XTB TRADEBEAT

USD remains steady, May to appoint new minister

Summary:

  • US dollar remains steady despite a miss seen in the employment report
  • White House does not see arguments for the quicker pace of rate hikes
  • Theresa May is expected to appoint a ’Cabinet minister for no deal’, GBP becomes barely changed 

The first hours of the new trading week passed outstandingly calmly as some Asian stocks were closed while the macroeconomic calendar during Asian hours was almost empty. We got just a reading on Australian construction PMI for December which turned out to be well below the prior one. It came out at 52.8 meaning a decrease from 57.5 seen in November 2017. Although some key findings point to a slowdown across the whole industry, the data marked the 11th consecutive month of expanding conditions. Let us remind that we already knew manufacturing and services PMIs from Australia last week (the former came in below the prior value whereas the latter proved to be a notch better compared to November). As a result the Australian dollar is among the weakest currencies in the G10 basket, however losses have not been substantial thus far.

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Technically the AUDUSD has already run into a crucial obstacle which could give a rise to a deeper retreat. Notice that this level served as a relevant turning point in the past, hence there is a possibility that bears will try to take control on the market anew. If so one may count on a fall at least toward 0.7755. Source: xStation5

While the Australian dollar has been on the back foot, the US dollar has performed quite well irrespective of a miss in the NFP reported on Friday. To be honest the report did not change too much as the Federal Reserve seems to be still en route to three rate hikes this year as forecast in December. During the Asian session we had a speech from FED’s Williams who reiterated his stance that three rate increases seem to be still reasonable. On the flip side though, the White House informed over the weekend that the FED does not need the faster pace of rate increases due to the recently-passed tax overhaul package. The WH underlined that the administration’s computer modeling of the economic effects of the tax plan result in interest rates that ’’are not inconsistent with the FED’s current guidance’’. 

Finally let’s mention the Brexit thread which has become a bit forgotten of late. As per The Telegraph’s revelations UK Prime Minister Theresa May is anticipated to appoint a Cabinet minister for no deal as part of the reshuffle of her top team which begins on Monday. A new minister should work in the same Department for Exiting the European Union where David Davis works. The move is to be a sign of fearlessness of Theresa May as she is ready to leave the bloc even if the talks fail. The British currency has not responded yet to those reports, however the pound is under subtle downward pressure. 

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The GBPUSD has failed to break above a resistance placed at 1.3610. That said one may foreshadow that sellers could take a stab at lowering the price despite the sub-par jobs data from the US economy. The closest support is localized at 1.35 which could constitute a potential turning point in this market. Source: xStation5

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