Markets enter risk-on mode as a US deal to avoid another government shutdown looks done…
Financial markets entered a state of risk-on mode yesterday after it appears a deal between the Democrats and Republicans appears to be on the cards. Compromise has afforded Trump around $2 billion in tax payers dollars to allocate toward border security. The positivity was most felt in the global equity markets which rallied hard across the day and into the overnight Asian session. The US dollar saw mild weakness as participants chose to move money into the more riskier currencies as well as the commodity-backed pairs. The pound managed to regain the $1.29 handle while the euro jumped above $1.13. Investors will now look to trade talks between the US and China for a new potential market-moving catalyst.
On the economic data front, today is all about inflation. Both the UK (0930) and the US (1330) will release their latest reports. Both of these will be important due to how they influence policy for each regions respective central bank. As a result, the GBPUSD pair is very much going to be in focus today. The exchange rate currently lies around the $1.29 mark, there are 2 very clear shorter-term support levels which could easily come into play today. On the downside, $1.2830 capped losses yesterday and will be the next marker to define whether the pair is heading even lower. On the upside, $1.3030 provided formidable support previously and now will likely turn into a layer of resistance to any upward momentum.
Written by Viv Savani. 8:33am, February 13th 2019
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