The GBP is the strongest and the USD is the weakest as NA traders enter for the day

Technical Analysis

Author: Greg Michalowski | forex

Brexit hopes and BOE comments lift the pound

As North American traders enter for the day, the GBP is the strongest and the USD is the weakest. The BOE's MPC member Ramsden played down the idea of negative rates and hopes for moves forward in the Brexit negotiations this week.   Technically, the GBPUSD broke out of of the confined up and down price range that confined the pair over the last 4 trading days.  All other GBP pairs are outperforming. US stocks are set to open higher which has traders back on the stocks higher---> dollar lower trade (at least for the day).   There is little on the economic calendar today (Dallas Fed manufacturing activity).  Covid cases in the US were up on Friday to the highest level since August 7. Stimulus chatter remains but seems elusive. Trump and Biden square off on Tuesday with their 1st election debate. TiKTok remains in the news as a judge temporary blocked a ban of the download on app stores on Apple.  The debate begins with the nomination of Amy Coney Barrett to the Supreme Court.  Although the debate is likely to be lively and contentious, she is expected to get the needed votes (at least as we stand now).  The weekend news that Pres. Trump has not paid much taxes (due to losses in his businesses), did not cause much of a ripple.  Biden stays in the lead but anything can happen. 

Brexit hopes and BOE comments lift the pound
The ranges and changes are skewed toward the GBP pairs. All of the GBP pairs have oversize ranges above their 22 day averages and trading near the higher GBP levels. The other pairs vs the USD are trading with relatively modest trading ranges. The EURUSD has next highs range at 60 pips (behind the GBPs oversized 185 pip range). The other pairs are all trading with a 45 pip or lower trading range (although near dollar low levels).

The ranges and changes for the major currency pairs 

In other markets:

  • Spot gold is trading marginally higher. The prices up $2.23 or 0.12% $1863.81
  • Spot silver is up $0.16 or 0.72% at $23.05
  • WTI crude oil futures trading trading near unchanged levels for the day. The front contract is up $0.04 or 0.10% of $40.29
In the premarket for US stocks, the futures markets are implying a higher opening with the NASDAQ leading the way higher
  • The Dow Jones up 371 points
  • S&P index is up 47 points
  • NASDAQ index is trading up 215 points
In the European equity markets, the major indices are also trading sharply to the upside. 

  • German DAX, up 3%
  • France's CAC, up 2.19%
  • UK's FTSE 100, up 1.5%
  • Spain's Ibex, up 2.0%
  • Italy's FTSE MIB, up 2.1%
In the US debt market, the snapshot of yields are pointing to higher levels with a modest move higher in the 2-10 yield curve as well:

US yields are higher
In the European debt market, most of the benchmark 10 year yields are also trading to the upside. The one exception is the Italian 10 year which is trading modestly lower at -0.3 basis points.

European yields are mostly higher

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