May struts around after Brexit win, Fed meeting awaits

January 30, 2019

It was a big night for Brexit negotiations as UK politicians passed amendments to Theresa May’s Brexit deal. Now she has to take this amended deal back to the EU for re-negotiation.

The EURUSD remained rather flat in trading overnight after opening at $1.14261. The pair climbed to a high of $1.14498 mid-session before falling to a low of $1.14102 a few hours later. It was able to recover some of those losses and is currently trading at $1.14335. The GBPUSD was belted overnight as the Brexit vote got underway. The pair opened at $1.31512 and traded in a tight range throughout early and mid-session trading. The pound then kicked up to a high of $1.32000 just before the vote and then the sell-off began. Late trading saw the pound plummet to a low of $1.30548 before recovering a small amount of those losses. It is currently trading at $1.30791.

The Dow recovered its losses from the previous session after opening at 24,492.16. The index hit an early low of 24,385.35 before the upward momentum kicked in. The Dow rallied to a high of 24,673.44 late in the day and remained close to those levels for the remainder of the session. It has opened this morning near that high and is currently trading at 24,670.48. The Dax opened and closed rather flat, with some movement in between. The German index opened at 11,211.89 and dropped to an early low of 11,159.90. It bounced off those lows and climbed to a high of 11,277.90 before retracing and closing at 11,207.40.

The day ahead will be filled with chatter about the next stage of Brexit negotiations after Theresa May’s win. However, there are already voices within the EU establishment who have said they will not re-negotiate with the UK over the Brexit deal that was agreed upon before the first parliamentary vote. Theresa May has a tough job ahead of her, but at least this time around, she has the backing of her own parliament.

The other event that markets will be keeping an eye on is the latest meeting of the US Fed Reserve, which will take place tomorrow morning. While it is not expected to raise rates, the crucial thing for markets are the comments made by Fed Chair Jerome Powell. After first mentioning that rates were going to rise faster, then an “easing off” on that rhetoric in more recent times, it will be important to gather the insights of central bankers as to the health of the US economy and future monetary policy settings.

Data released today includes:

Australia – CPI and Trimmed Mean CPI

Japan – Retail Sales, Consumer Confidence

UK – BRC Shop Price Index, Net Lending to Individuals, M4 Money Supply, Mortgage Approvals

US – Federal Funds Rate, FOMC Statement & Press Conference, Pending Home Sales, Crude Oil Inventories, ADP Non-Farm Employment Change

Europe – French Flash GDP & Consumer Spending, German GfK Consumer Climate, Import Prices and Prelim CPI, Swiss KOF Economic Barometer, Credit Suisse Economic Expectations


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