Sterling holds as the market readies for Boris Johnson breakthrough
US stocks ended the day slightly higher as the market braced for what will be a busy earnings week. This week, 129 companies in the S&P500 are expected to release their earnings. Key companies to watch today will be UBS, PulteGroup, Kimberley-Clark, Lockheed Martin, Chipotle, Sketchers, and Hasbro among others. The market will also continue to focus on Boeing, which is under intense scrutiny over the Boeing 737-Max issue. Yesterday, its stock declined by more than 4%, which helped drag the Dow Jones Industrial Average.
The sterling remained close to the five-month high even after Boris Johnson's contentious attempt to take his exit bill to parliament. The market is confident that Johnson could secure a narrow victory on the deal he secured with the European Union. Research by the Financial Times found that Johnson could get 320 legislators to vote for his deal. 315 of them are likely to oppose the deal. The market is also confident that Johnson could head off attempts to attach a second referendum clause to his deal. Opposition members have advocated for another referendum to help decide the future of the country. They have also criticized the government for not providing an economic analysis of the deal.
The economic calendar will be a bit light today. From the US, the market will receive existing home sales data for September. Traders expect sales of 5.45 million homes, which will be slightly lower than 5.49 million that was recorded in August. Along this line, traders will receive earnings data from home builders like the PulteGroup. From Canada, the market will receive retail sales data for August. The market expects retail sales to have increased by 0.5%, which will be slightly higher than the previous 0.4%. Core retail sales are expected to increase by 0.1%.
The EUR/USD pair was unchanged in the Asian session. As of writing, the pair is trading at 1.1150, which is slightly lower than yesterday’s high of 1.1182. On the hourly chart, this price is along the 14-day and 28-day moving averages. The Chaikin oscillator has moved slightly above the neutral line. At this point, the pair may keep consolidating as the market waits for the ECB decision on Thursday.
GBP/USD pair remained close to the highest level since May as the market waited for more information on Brexit. On the hourly chart, the pair is trading slightly below yesterday’s high of 1.3015. This price is along the 28-day and 14-day moving averages while the RSI has remained below the overbought level. The accumulation/distribution indicator has continued to move higher. This consolidation may lead to significant movements as the Brexit situation gets underway.
The Canadian dollar has been on a sharp upward trend against the USD after a series of positive economic numbers. The pair reached a low of 1.3070 in the Asian session. This was the lowest level since July 22 this year. The RSI has moved below the oversold level of 30. The same is true with the MACD line. The price is also below the short and medium-term moving averages. There is a possibility that the pair may continue its downward trend.