Sterling unchanged as Theresa May survives vote of no confidence
Sterling was little moved after Theresa May survived a vote of no confidence yesterday. The vote was introduced by Labor party leader Jeremy Corbyn. It came a day after her Brexit proposal was rejected by the House of Commons. In a speech after the vote, the premier said that she will work across party lines to prevent the chances of a no-deal Brexit. While there is a long way to go, the vote yesterday was a positive thing for the UK because it reduced the possibility of exiting without a deal. Other than Brexit news, the country also released house price data, which declined by 19% in December. This was the sharpest decline since 2013.
In the United States, the government shutdown extended for the third week and there is a likelihood that it could go on. The shutdown has been caused by a division between the White House and Congress. The White House and Senate have insisted that only a bill with wall funding will be signed. Congressional democrats have rejected this. Yesterday, JP Morgan’s CEO, Jamie Dimon advised the two sides to agree on a bill that will produce a win-win scenario. Under his plan, the White House will get its wall while congressional democrats will get their DACA.
The euro was little moved in overnight trading as investors waited for CPI data from the EU and housing data from the United States. Data from Eurostat is expected to show that CPI in December was unchanged at an annualized rate of 1.9%. On a MoM basis, the CPI is expected to decline by 0.2%. The core CPI is expected to rise by an annualized rate of 1.0%, which will be unchanged from the previous month. In the United States, the building permits for December are expected to reduce to 1.29 million while new home sales are expected to rise to 569K.
The EUR/USD pair declined slightly to a low of 1.1385. Over the past week, the pair has declined sharply from a high of 1.1570. On the hourly chart, the price is below the 42-day and 21-day exponential moving average while the commodity channel index has declined to the oversold territory. The RSI has remained stable along the mid-40s levels. There is a likelihood that the pair will continue to decline. If it does, investors should look at the important support of 1.1350.
The USD/CHF pair continued to move up as the dollar strengthened. In the past week, the pair has gained sharply, rising from 0.9715 to a high of 0.9920. On the hourly chart, the pair has just crossed an important resistance level and is attempting to reach the parity level of 1. Parity was lastly reached in November last year. On the hourly chart, the pair’s price is above the short and medium-term EMAs while the RSI has moved to above the overbought level. The momentum indicator is also moving higher. There is therefore a likelihood that the price will continue moving up.
The price of palladium remains at multi-year highs as emission standards rise around the world. The XPD/USD pair is trading at 1320, which is slightly lower than the high of 1335. On the four-hour chart, the price is above the short and long-term moving averages as shown below. The RSI has moved slightly lower from the previous highs of 80 to the current 70. With the momentum indicator falling, there is a possibility that the price will ease a bit as traders take profit.