ALPHA Market Update 24 January 2019

24.01.2019

United States

  • Initial Jobless Claims and Manufacturing PMI will be released at 13:30 and12:45 respectively
  • White House Economic Advisor: Government shuts down is possible to slow US GDP growth to zero this quarter
  • Trump’s State of the Union address plan is blocked. The Democratic Party leader of the House of Representatives swears that they won’t release of the Union address unless the government ends up closing
  • The White House is preparing for a long-term closure and the media said that the chief of staff is seeking to understand the impact of closing the door to March and April.

Commodities

  • The oil market fell on Wednesday as a widespread economic slowdown, which may dent growth in demand for fuel, weighed on energy prices. International Brent crude oil futures fell 35 cents, or about half a percent, to $61.15 per barrel around 2:30 p.m. ET. U.S. West Texas Intermediate crude futures ended Wednesday’s session down 39 cents, or about 0.75 percent, at $52.62 per barrel.
  • On Wednesday, the Trump administration announced it would back Venezuelan National Assembly leader Juan Guaido, who declared himself the country’s interim president earlier in the day. Shortly after President Donald Trump recognized Guaido, Venezuelan President Nicolas Maduro severed relations with the United States and gave U.S. diplomatic personnel 72 hours to leave the country. The latest development raises the prospect that the United States will expand sanctions to U.S.-Venezuelan energy trade, a move that would be potentially devastating to Venezuela. The nation has seen its oil production crater in recent years, depriving the socialist republic of its lifeblood energy revenue and exacerbating a devastating economic crisis.

United Kingdom

  • GBPUSD continued to rally and break 1.31 very briefly last night, this is because we are mitigating the no deal Brexit risk, JRM said that an amended deal could be appealing to some that voted against the current deal, moreover the USD is very weak given the china talks and the government shut down.

Europe

  • Yellow Vest protesters behind the Europe-wide uprising and mass revolt against French President Emmanuel Macron are launching their own political party to stand for the European elections in May. Following violent and angry demonstrations in EU member states such as Spain, France, Germany, the Netherlands and Belgium, the movement announced single mother Ingrid Levavasseur, 31, will head the party which is yet to be named. The nurse from Normandy, northern France, was one of the founders of the uprising, which began in Paris in November over Mr Macron’s 23 percent fuel hike. A group spokesman said they hope to have a total of 79 candidates for the elections, which includes a forklift driver, accountant and a housewife. He added: “We want to create a list that resembles the citizens and shows that we are independent, non-partisan from the first day.” The movement even found itself in Britain recently with protests led by Leave voters over Theresa May’s controversial Brexit deal that would keep the UK shackled to the EU’s customs union and single market.

Australia & New Zealand

  • AUD slumped to a three-week low Thursday after an apparently strong labour market report for December was overshadowed by National Australia Bank (NAB) having joined other major lenders in hiking its variable mortgage rates, stoking fears for the housing market and economy.
  • NAB said Thursday it’s hiking the rates charged to existing mortgage borrowers by between 0.12% and 0.16% following a sustained increase in “international funding costs”. That is the result of Federal Reserve (Fed) interest rate policy, which has driven up the cost of U.S. Dollar funding on international markets.
  • Owner occupiers of residential property will now see an additional $22 added to their monthly mortgage payment, NAB estimates. Although small, this is equivalent to around half a Reserve Bank of Australia(RBA) interest rate hike.
  • NAB has revised their forecasts for the New Zealand Dollar in the new year, and show the Pound should climb above the 2018 psychologically significant 2.0 marker again in 2019.
  • The New Zealand Dollar is forecast to run in roughly the centre of the ‘chasing pack’ of G10 currencies. It will trade mixed against the majors: rising versus the U.S. Dollar but falling versus the Pound, which is forecast to outshine as Brexit fears abate.
  • NZD took a hammering in 2018 as global growth fears weighed on its export-oriented economy. Yet on the upside, to some extent, much of the ‘bad news’ has now already been priced in.
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