STERLING DROPS SHARPLY AS BREXIT UNCERTAINTY CONTINUES
The sterling dropped by more than 70 basis points today as the UK enters a critical point as it grapples with Brexit. In the past weekend, the EU leaders voted unanimously on accepting the proposed deal. Theresa May now faces a tough challenge on how to convince her party MPs to accept the deal. She argues that this is the best deal for the country. Already, many MPs in her party have signaled that they will not support the deal because they believe it gives the European Union a lot of power over the UK. As a result of the uncertainties, investors have continued to deal with constant swings on the sterling as they process new information. Earlier this week, Barclays warned that a rejection of the deal by parliament by a wide margin increased the chances of a no-Brexit deal and placed the sterling at a risk of a 5-10% decline against the USD.
The New Zealand dollar rose today against the USD ahead of the financial stability report that will be released later today. Earlier on, the New Zealand bureau of statistics released the trade data that showed increased deficits. The imports in October rose to N$6.75 billion, which was higher than September’s N$5.84 billion. At the same time, exports rose to N$4.86 billion, which was higher than $4.25 billion in September. The deficit rose to N$1.295 billion.
Ethereum and other cryptocurrencies continued to decline. Cryptocurrencies dropped by more than $100 billion in the past week. The total market valuation of all cryptocurrencies has declined to $120 billion. Ethereum is valued at $10 billion, which is much lower than its peak valuation of more than $100 billion. The decline in crypto is associated with the loss of confidence and the constant stream of bad news in the industry.
World markets were mixed today after Trump lowered the expectations of his meeting with China’s Xi Jinping. In an interview with the Wall Street Journal (WSJ), the president said that he had low expectations for the meeting. He also reiterated that tariffs worth more than $267 billion will go into effect in January. The China A50 index ended the day lower by 50 points while the DAX and Stoxx declined by 30 and 7 points respectively.
The EUR/USD pair dropped to the important support level of 1.1300. It then moved slightly up and is currently trading at 1.1320. The pair has been on a slow downward trend that started on Tuesday last week. Its moving averages point to a continued downward trend. The price is along the middle band of the Bollinger Bands. The RSI has moved slightly higher from the intraday low of 31. There is a likelihood that the pair will continue the downward trend.
The ETH/USD pair has been on a free-fall. In the past week alone, the price has dropped from above 170 to the current 101. Today, it dropped to below 100. The pair’s RSI remains in the oversold zone of below 30 while the double EMA show that the pair could continue the downward trend. This is also indicated by the Bollinger Bands and the Bears Power indicators as shown below.
The New Zealand dollar rose to an intraday high of 0.6800. Since Monday last week, the pair has been on a downward trend as shown below. This has led to the formation of a symmetrical triangular pattern. Today’s upward movement led the pair closer to the upper resistance level. Therefore, there is a likelihood that the pair will move upwards to test the upper line of 0.6805. If the pattern continues, it will then likely move lower to the 0.6750 support level.