Análisis de mercado diario

GBPUSD offered a tepid immediate response to the first televised debate of the current UK election campaign. The historic exchange between Boris Johnson and Jeremy Corbyn offered scarce fresh insights, with the snap poll following the debate suggesting that there was no clear winner.

With Sterling’s latest assault on the 1.30 level versus the US Dollar falling short yet again, the currency pair had moderated in the hours leading up to the debate, before settling in the lower 1.29 range for the time being. The Pound has come off its strongest level against the Euro in six months, only to post slight gains versus the bloc currency during the debate.

Ultimately, investors will relate the outcome of the December 12 polls to the UK’s ambitions of leaving the European Union. Should a path to a surer and speedier Brexit become clearer over the next three weeks, that could translate into GBPUSD emulating its year-to-date high around 1.34. In the meantime, expect the Pound to remain primarily swayed by the political nuances during this campaigning period.

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Asian stocks are mixed after US stocks came off record highs, as investors await the Federal Reserve’s latest policy decision and forward guidance. Safe haven assets have also been trading sideways mostly, with Gold not straying too far from the $1500 psychological level, while the Japanese Yen remains below 109 against the US Dollar.

The Dollar index (DXY) is currently steady around the mid-97 levels, as markets await Fed chair Jerome Powell’s forward guidance, sandwiched between the release of US Q3 GDP data and the October non-farm payrolls report. With Fed funds futures already forecasting a 95 percent chance of a third consecutive 25-basis point cut to US interest rates, Powell’s remarks are set to have a bigger influence over the markets rather than the FOMC decision itself.

Should Powell signal a “hawkish cut”, whereby the Fed deems the US economy as having sufficient “insurance” after this month’s 25-basis point adjustment, that could propel DXY back above the 98 psychological level. However, if the door is left wide open for more US rate cuts going into next year, that would disappoint investors who are currently betting that the Fed will leave its policy settings unchanged for the December FOMC meeting.

The upcoming Q3 GDP and jobs report could also further garnish the Dollar’s moves this week, as investors ascertain whether the economic data will either raise or lower the bar for more Fed rate cuts.

Pound in political paralysis as investors digest snap election prospects

News of the upcoming UK elections didn’t offer markets enough reason to break GBPUSD out of the 1.28-1.29 range for now. Over the next six weeks, Sterling could still reflect the political nuances out of the UK as investors try and pre-empt the outcome of the December 12 polls.

Ultimately, investors will be filtering the elections through the Brexit prism, hoping that the world can gain conclusive clarity to this saga that has dragged on since 2016. It remains to be seen how the various political parties position themselves during the campaigning period, who has the better chances of winning and potentially having the final say on Brexit. However, with a no-deal Brexit now seemingly off the table, that suggests that Sterling’s downside is limited, barring any sustained rally in the US Dollar.

Post-Fed Dollar moves to feed into Oil’s near-term performance

Brent futures have climbed more than 3.5 percent so far this month and made their way above the 100-day moving average, taking advantage of the softer Dollar. Oil prices have been buoyed by expectations that OPEC+ will have to enact deeper supply cuts in December, as well as optimism surrounding a US-China trade deal. Should any of these hopes prove unfounded, Brent is likely to give up recent gains as investors refocus on further signs of waning global demand and rising US stockpiles. In the event that the Fed signals a “hawkish cut”, subsequently prompting a bout of Dollar strength, that could add to the downward pressure on Oil prices.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian stocks are taking their cues from the mixed close in US stocks, with the S&P 500 just 16 points or 0.5 percent away from a new all-time record close. The ongoing earnings season has given equities another leg up , even as global uncertainties persist. Despite some bellwether companies missing estimates, many of the reported results show US companies faring better than expected amidst global trade tensions and the downward pressures on the world’s economy. However, noting that the downside risks are still on the table, markets may not be fully comfortable with diving head first into riskier assets, until there is greater certainty surrounding the US-China trade conflict and Brexit.

UK election adds to political risks surrounding Sterling

GBPUSD dipped below 1.28 before paring losses but is still currently weaker against most G10 and Asian currencies. Although the October 31 deadline is set to be a mere footnote in this longstanding Brexit saga, the Pound will remain sensitive to any political developments either out of Westminster or Brussels.

Given calls for a UK election, this adds another layer of political risk to Sterling’s outlook. Since surging about 6.5 percent to breach the 1.30 level, GBPUSD has moderated as markets question the justification for keeping the Pound elevated. Still, at least investors can draw relief from the diminished chances of a no-deal Brexit, which puts a sturdier floor below the Pound.

Policy continuity, economic pressures muddy Euro outlook

EURUSD is hovering just above the 1.11 psychological level, after the European Central Bank decided to keep its policy settings unchanged at Mario Draghi’s final meeting at the helm. With new President Lagarde taking up the reigns next Friday, policy continuity is set to frame investors’ outlook at the central bank, with the Eurozone economy still contending with subdued economic growth.

Germany’s manufacturing slump, as evidenced further by yesterday’s IHS Markit manufacturing PMI, continues to be a drag on the EU economy. Unless policymakers step in with substantial fiscal stimulus measures, barring a rapid dissipation of external headwinds, the outlook for the economy and the bloc’s currency remains tilted to the downside.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Risk appetite has been given a boost on several fronts: the US and China have officially agreed to resume trade talks in October, while UK Prime Minister Boris Johnson’s willingness towards a no-deal Brexit has been significantly curtailed, after Parliament moved to block a no-deal Brexit occurring on October 31 and also rejected the call for a snap election.

Such developments have given Asian assets cause to lift their heads higher: Asian stocks are a sea of green, while most Asian currencies are strengthening against the US Dollar, with the South Korean Won the runaway leader of the pack gaining about 0.8 percent versus the Greenback.

Safe haven assets are also paring recent gains, with Gold shedding some 0.9 percent, the Japanese Yen weaker by about 0.3 percent against the US Dollar, and 10-year US Treasury Yields spiking above the psychologically-important 1.50 percent level.

Seasoned global investors still cautious over downside risks

Despite the gains in riskier assets, global investors are not getting carried away by this surge in optimism, having been seasoned by the tumultuous developments surrounding the year-long US-China trade conflict as well as the Brexit saga which has dragged on since 2016. The lift in risk sentiment appears mitigated by the concern that the latest positive developments surrounding these macro events (US-China trade conflict, Brexit) may prove fleeting and do not yet fully nullify these downside risks. In order for risk sentiment to push higher, markets will need to be shown further material signs that US and China are indeed drawing closer to a meaningful and lasting trade deal, while the prospects of a no-deal Brexit have to be significantly lowered some more, if not completely snuffed out.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

While it was expected that political risk would continue driving sentiment this week with the UK Election just days away, nobody saw it coming that the main story at the beginning of the week would be the unexpected news that a Saudi-led alliance would cut all diplomatic ties with Qatar. This news was felt strongly across regional markets around the GCC region, especially the Qatar Exchange Index that suffered its heaviest fall since 2009 at around 8%.

There was not a great deal of political risk being priced into the regional markets, therefore the markets have been caught off-guard by this unexpected development and this is something that international investors will be monitoring in a week that was expected to be dominated by the upcoming UK election.

Outside of the regional markets around the GCC and some headlines around Oil (more on that below), this news around Qatar has not had the type of impact you would expect (risk-off) and we are actually seeing some buying demand for high-yielding currencies. When it came to the developed currencies the Australian Dollar was the winner of trading on Monday, while the Dollar slipped lower against the emerging market currencies across Asia and high-yielding currencies like the South African Rand.  The Mexican Peso looks like the real winner of the markets however, after the Peso strengthened to its highest level since November with the currency climbing 1.6% following projections indicating a narrow victory for the ruling party in Mexico’s biggest state.

As you would expect when it comes to any increase in political tensions across the Middle East, investor attention very quickly turned towards the Oil markets where the price of Oil moved around $1 higher in the early hours of Monday morning trade.

It has to be said however that a $1 increase in the price of Oil is hardly convincing or material in the grand scheme of things when you consider that the Oil markets are vulnerable to speculative shifts in either direction at any given point.

I personally believe that the supply/demand ratio will continue to be the main driver for investor sentiment and unless this unexpected news actually impacts the ongoing supply story that has dominated the market for over two years, investors could brush this news away as trading continues.

My own outlook for the Oil markets remains unchanged, and this is that the commodity should attempt to consolidate somewhere around the $50 region.

If you wanted to attribute how this development could impact the oil market potentially, then you could hypothetically factor in that not much political risk is actually priced into the market at present. If political risk between key producers does accelerate then the market will perhaps need to begin paying more attention to this.

Where does this all leave Qatar? Well that’s one of the many unknowns at this stage. Until an official statement is made on the unexpected developments today it is difficult to tell.

My view is that it would be premature at this stage to suggest that this development could have an impact on the OPEC deal, but a potential risk to monitor might be that Qatar will view this as being provided with less encouragement to comply with the agreed production quota.

This is completely hypothetical however at this stage. In the instance that this did occur, or if other producers included in the OPEC agreement diverted away from the production quota then this would be seen as having negative connotations on the price of Oil.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.