What to expect from Cable Post U.K. ElectionsUpdated 10:27AM 12/12/2019
NOK and AUD are the top G10 FX gainers today, up 0.13% and 0.1% vs the dollar while JPY and SEK are the top losers, down -0.12% and -0.09% vs the dollar.
The foreign exchange market will focus on the U.K. election where the Conservative Party is expected to win a majority. There is still some uncertainty as recent polls have seen increased chances of a hung parliament (around 30%). In our view, a scenario where the Conservative party wins a majority will push GBPUSD to $1.35, while a hung parliament may see Cable at $1.2800.
The Euro reached a five-week high versus the dollar ahead of the first policy meeting by the new ECB President Christine Lagarde. The rise in EURUSD was seen after Federal Reserve said that it will hold rates through 2020. The Fed announcement left the dollar to its lowest levels since August. In our view, we don't expect any change from the stated ECB stance of lax monetary policy in the Lagarde's first policy meeting
In the Asian equities space, the Nikkei 225 closed up 0.14% at 23,424.81, Hang Seng closed 1.31% at 26994.14 and Kospi ended 1.51% at 2137.35. The European equities were trading firm with the FTSE up +0.43% at 7246.95, DAX up +0.28% at 13183.15, and CAC up +0.33% at 5880.24. In the rates market, global yields were trading mixed; the US 10-year yield was trading at 1.8069% and the Bund 10-year yield trading at -0.325%. In the energy space, the Brent (front month) is trading up (0.69%) for the day at $64.16.
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Daily Pivots for Key Currency Pairs
10-year Yields Chart (6-month)
Brent Front Month Daily Chart (6-month)
USD-Index Daily Chart (6-month)
Major Currency Pairs
EURUSD Chart (Two-week)
Strategy: Resistance at 1.1167 for 1.1068
Short-term view: EUR/USD resistance at 1.1167, MACD and RSI are topping out. Hence, we see a move to 1.1100, likely 1.1068. Above 1.1167 to open 1.1200.
GBPUSD Chart (Two-week)
Strategy: Support at 1.3178, for 1.3296
Short-term view: GBP/USD support at 1.3178, MACD and RSI are improving. Hence, we expect a bounce to 1.3250, likely 1.3296. Below 1.3178 to open 1.3096.
USDJPY Chart (Two-week)
Strategy: Resistance at 108.81 for 108.01
Short-term view: USD/JPY resistance at 108.81, RSI and MACD are weak. A move lower to 108.01 is likely. Above 108.81 to open 109.47
AUDUSD Chart (Two-week)
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