Sterling rises ahead of a key parliamentary Brexit vote
US stocks pointed to a lower open, with the Dow expected to lose more than 100 points. Boeing was a big laggard, with its stock price declining by almost ten percent in the premarket. This was in reaction to a crash that happened yesterday in Ethiopia, which involved Boeing 737-Max, a relatively new single-aisle plane. In reaction to the crash, agencies from China, Ethiopia, and Indonesia grounded the planes as they wait for an investigation. This was a big blow to Boeing, which has been producing almost 60 similar planes every month as it struggles to fill a backlog of almost 6000 planes.
The sterling rose today even as risks of a no-deal Brexit increased. The house of commons is expected to vote on a revised deal by Theresa May tomorrow and traders are hoping that a vote against the deal will lead to a postponement of the vote. While this will lead to more uncertainty, it will help ease the tensions in the short-term. A no-deal Brexit could be damaging to the economy and would likely lead to more job losses. Already, big employers like Airbus and Rolls-Royce have said that they would shift their UK operations to the European Union.
The euro was little-moved after it emerged that the US was about to be in confrontation with Germany. The bone of contention is Germany’s Nord stream 2 gas project, which will transport gas from Russia to Germany. Trump, and the past US administration have been unhappy about the project because they believe it will make Germany more dependent on Russia. The Trump administration has threatened to sanction the project, which will leave it to Russian and Chinese funding. This is happening at a time when the Trump administration is reviewing whether it will impose tariffs on European cars. Today, data from Germany showed that exports were unchanged in January while imports moved up by 1.5%. The trade surplus reduced to 18.5 billion euros. At the same time, the industrial production declined by 0.8% in January.
In the United States, the retail sales data was better than the consensus estimate. The data showed that retail sales rose by 0.2% in January. This was higher than the expected no growth. Retail sales (ex gas/autos) rose by 1.2% while the core retail sales rose by 0.9%. Retail control rose by 1.1%, higher than the expected 0.6%. This data came after the huge disappointing jobs numbers released on Friday. The number showed that the economy added just 20K jobs in February.
The EUR/USD pair was little moved in today’s trading. The pair is now trading at 1.1240, which is slightly lower than the day’s high of 1.1260. On the hourly chart, the price is along the middle line of the Bollinger Bands while the RSI has dropped slightly to about 54. The Parabolic SAR has moved to below the price. Therefore, there is a likelihood that the price could breakout in either direction.
The GBP/USD pair moved up today as traders watched the developments on Brexit. The pair rose to an intraday high of 1.3045, which is slightly closer to the 23.6% Fibonacci Retracement level. On the hourly chart, the RSI has moved from a low of 18.70 to the current 58, which is an indication that the pair could continue moving up. This is evidenced by the pair’s double EMAs, which are doing a crossover. There is a likelihood that the pair will likely test the 23.6% and the 32.8% Fibonacci levels of 1.3050 and 1.3110 respectively.
The USD/CAD pair was little moved after the better-than-expected retail sales numbers. The pair is trading at 1.3420, which is along the 61.8% Fibonacci Retracement level. This price is along the 21-day EMA but higher than the 42-day EMA. The RSI has moved lower from a high of 80 to a low of 60. The price is also along the middle line of the Bollinger Bands. At this point, the pair could move in either direction.