Posted on: 19 January 2016, by: Pepperstone Support, category: Market Review
With the U.S. holiday, markets broadly consolidated.
The main event of the European session was the release of the Riksbank minutes from the extraordinary meeting on January 4, where the bank enables its Governor and First Deputy Governor to instantly intervene on the FX market. According to the minutes: “The Riksbank shall intervene on the foreign exchange market as a complementary monetary policy measure if interventions are considered necessary to ensure that developments in the krona exchange rate do not comprise a serious risk to the upturn in inflation”.
GBPUSD has been in a consolidation mode post the sharp selloff last Friday in NY and EURGBP is still stalling ahead of 0.7700. Over the weekend, a Survation poll showed 42% voted for the UK to leave Europe, 38% to stay and 20% undecided. Our trader pointed out this poll isn’t exactly the most credible and UK bookmakers (who called the UK election spookily correctly) say that 65% chance UK stays in.
EURUSD has stayed on the sideline with little catalyst on the domestic front.
USDJPY recovered the 117 handle during the Asian morning as Nikkei bounced back from a lower open, and has since traded in a tight range around 117.20. Governor Kuroda was speaking at the BoJ branch chief meeting and again at Parliament, but there is nothing new from his remarks.
Oil futures opened slightly lower and then plunged by around 4% with Brent trading below USD28 at one point, as Iran emerged from international sanctions and returns to an already over-supplied market. However, the downside momentum soon fizzled out and both Brent and WTI are trading slightly above Friday’s levels now.