Sterling unchanged as Scottish supreme court rules parliament suspension illegal
The sterling was relatively unchanged today after the Scottish supreme court ruled that the suspension of parliament was unlawful. Opposition lawyers who forwarded the case to parliament argued that the suspension for five weeks was illegal and in breach of the constitution. This decision came a week after another similar case in London ruled in Johnson’s favor. In an immediate response, the government said it will appeal the ruling. Still, investors are looking forward to the next action by Johnson, who has been corned by parliament. Today, his envoy on Brexit arrived in Brussels where he is trying to negotiate a deal.
The price of crude oil rose slightly after the sharp decline that happened yesterday. Yesterday, the price of crude oil declined sharply after Donald Trump fired his national security advisor, John Bolton. Investors viewed the exit of Johnson as a positive move for the president. This is because Bolton is a known hawk who supports the projection of American power around the world. He has advocated for regime change and bombing of Iran and North Korea. Therefore, investors believe that his exit could lead to talks between the US and Iran, which would lead to the removal of sanctions.
US stocks rose slightly after China announced that it was suspending tariffs on some American goods. In a statement, the country said that it will remove tariffs on 16 categories of goods for one year. The list included products like cancer drugs, lubricants, and chemicals that are essential in the economy. The exempted goods list does not include sensitive items like pork and soybeans. These exemptions came a few weeks before the two countries are scheduled to restart talks on trade. Meanwhile, the dollar strengthened against the euro even after Donald Trump asked the Federal Reserve to lower interest rates to zero or below. This came before the important US PPI data for August. In the month, PPI increased by 1.8%, which was slightly better than the expected 1.7%. The core PPI increased by 2.3%, which was higher than the consensus estimate of 2.2%.
The EUR/USD pair declined past important support as investors waited for the ECB decision, which will be released tomorrow. The pair is now trading at 1.1000, which is below the important support of 1.1015. On the 30-minute chart, the pair continued the downward trend that started yesterday. The pair is along the lower line of the Bollinger Bands while the RSI has moved below the oversold level of 30. The Bears Power indicator has continued to decline. The pair will likely continue moving lower ahead of the ECB statement tomorrow.
The GBP/CHF pair was relatively unmoved today and is currently trading at 1.2258. On the four-hour chart, the pair is trading slightly below the upper line of the Bollinger Bands. It is also trading slightly above the 61.8% Fibonacci Retracement level. The RSI is slightly below the overbought level of 70 while the momentum indicator appears to be waning. The pair will likely move lower to the 61.8% Fibonacci level of 1.2180.
This month, USD/JPY pair has been on a strong upward trend, rising from a low of 105.72 to a high of 107.84. On the 30-minute chart, this price is above the 50-day moving average and along the 25-day moving averages. As the pair eased today, the RSI dropped from a high of 79 to a low of 47. The pair could continue moving lower to the important support of 107.50 before resuming with the upward trend.