Equities Trade Mixed, GBP Slides on Brexit, EUR Gains After ECB

USD Slides, Global Stocks Trade Mixed

The US dollar traded lower against all but one of the other G10 currencies on Thursday and during the Asian session Friday. It underperformed only versus GBP, while it gained the most against AUD, NZD, NOK, and CAD in that order.

UK PM Johnson Pushes GBP Lower, EUR Gains After ECB

In the FX world, as we already noted, the pound was the sole loser against the US dollar, at least among the G10s, and this had to do once again with headlines surrounding Brexit. After failing to reach common ground with EU Commission President Ursula von der Leyen, UK PM Boris Johnson said yesterday that there was “a strong possibility” that the UK and the EU would fail to strike a trade deal. This may have sparked even more fears over the likelihood of a no-deal Brexit in three weeks, which is the deadline for the two sides to sign any accord. We repeat that the pound is likely to stay very sensitive to Brexit developments, with anything suggesting that the two sides find it hard to bridge their differences, having the potential to push the pound lower. For the pound to rebound, headlines that some sort of consensus is reached are needed.

GBP/NZD — Technical Outlook

GBP/NZD tumbled yesterday, after hitting the downside resistance line drawn from the peak of October 30th. What’s more, the slide brought the rate below Monday’s low of 1.8845, thereby confirming a forthcoming lower low. All these technical signs paint a negative short-term picture in our view.

EUR/JPY — Technical Outlook

EUR/JPY has been moving in a sideways manner, between 125.77 and 126.75, since December 1st. Nonetheless, in the bigger picture, the rate continues to trade above the upside support line drawn from the low of October 30th, and thus, we would see a mildly-positive picture.

As for Today’s Events

Germany’s final CPIs for November are expected to confirm their preliminary estimates, while in the US, the preliminary UoM consumer sentiment index for December is forecast to have declined fractionally, to 76.5 from 76.9.

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