Sterling Takes Centre Stage
Last week saw sterling take centre stage, as the currency performed the worst within the G10 space. Sterling slumped against the greenback to levels sub 1.2800 after tensions intensified between the EU and UK. Progress remains halted and the probability for a no-deal Brexit continues to rise. EUR/GBP jumped over 3.5% to close the week at levels last seen in March of this year as the two sides remain far apart. The ECB held their largely anticipated conference where Lagarde’s comments on the FX rate initially led to a Euro boost after which price tapered off lower on the day. Going into the week ahead, the UK will be in focus as the BoE look to deliver their Monetary Policy Summary.
The WHO reported its largest daily increase of worldwide Covid-19 cases after global cases increased by over 300,000 whilst deaths roses by around 5,500 in a 24-hour period. New Zealand PM Ardern extended the Level 2 virus restrictions in Auckland for another week whilst the rest of the nation will transition to level 1 by September 21st. AstraZeneca and the University of Oxford have resumed vaccine trials after the initial pause due to an individual becoming ill. No further reports have been given on the status of tests outside of the UK.
EU – UK post Brexit talks
The EU – UK post Brexit talks made little headway last week after both sides remain further apart than ever on the coming together of an agreement. PM Johnsons plan to propose the Internal Market Bill caused an uproar after backbenchers threatened rebellion over the government’s plan to break international law. Government aides and ministers are also considering opting out of human right laws which would set up another battle with the EU. PM Johnson has been accused of deliberately trying to destabilise talks to which he has responded that there is still a good chance of a Canada-style trade deal. Progress between the two parties appears stagnant after EU parliament leaders outlined that they will look to veto any future trade deal with the UK unless the Internal Market Bill is pulled in an attempt to implement the Withdrawal Agreement in full.
WTI Crude dipped further last week by over 5.5% on a cautious risk tone. With the 21EMA breaking beneath the 200 and 50EMA on the daily timeframe, the outlook remains bleak for the commodity. BP have warned of a peak to global oil demand in the approaching years as demand for crude has dropped substantially as a result of the Pandemic. Reports of a platform shutdown in the Gulf of Mexico due to tropical storm Sally lifted the asset somewhat this morning though prices still remain subdued. Going into the week will see the latest Monthly Oil market report being released by OPEC as well as the JMMC meeting set to take place on Thursday. The meeting is set to review secondary source data as well as current market fundamentals before policy recommendations are proposed. Earlier in the month Russian Minister Novak suggested that global oil demand has recovered to 90% of pre-crisis levels and outlined that OPEC should propose a plan to react to the recovery in demand.
In the cryptocurrency space
In the cryptocurrency space, BTCUSD trades around the $10,350 level subdued beneath the 21 and 50EMA. ETHUSD also made an attempt to break higher after pushing into the $390 level. Sellers soon stepped in and price currently trades around $365 which has held as a daily support level in the past. Litecoin traded indecisively last week after price ranged between the $45-$51 , price is currently holding at $47.50 whilst being supported by the 200MA.
Here is a breakdown of the high impact data releases this week.
13:30 Core Retail Sales m/m. Markets to watch: USD Crosses
19:00 FOMC Economic Projections & FOMC Statement. Markets to watch: USD Crosses
19:30 FOMC Press Conference. Markets to watch: USD Crosses
23:45 GDP q/q. Markets to watch NZD Crosses
02:30 Employment Change & Unemployment Rate. Markets to watch: AUD Crosses
Tentative Monetary Policy Statement. Markets to watch: Yen Crosses
12:00 MPC Official Bank Rate Votes, Monetary Policy Summary & Official Bank Rate. Markets to watch: GBP Crosses