Summary:
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USD begins the week higher; GBPUSD breaks trendline
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GBP lower as PM’s future hangs in the balance
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Oil retests recent lows as Saudi plans output increase
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Brazil in the green in the final week of campaign
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Crypto drops lower; ports look at blockchain
The US dollar has traded in a fairly narrow range for the past few weeks with a trade weighted index not moving more than 1.5% or 140 pips from low to high. Last week saw a green close and the market hold above the 95 handle once more, but price remains shy of the recent ceiling of 95.83. The last 3 weekly candles show wicks both above and below, which suggests that bulls and bears are fairly evenly matched with pushes higher or lower fading back. There are some gains seen on the day, but for the time being at least, the buck remains rangebound on the whole.
One USD pair that could be breaking out however is GBPUSD, with the cross moving below a rising trendline dating back to August. The pound has begun the week on the back foot as speculation mounts that UK PM Theresa May could face a vote of no confidence in just a matter of days. The declines are fairly measured at present but the added uncertainty of the PM being ousted at what is a critical time in Brexit negotiations could cause a swoon lower - particularly if she is replaced by former Brexit secretary David Davis who would likely push for a “harder” separation.
Last week saw some pretty heavy declines for the crude market with both Oil and Oil.WTI hit with some selling. The benchmarks were already trading lower before the US inventory release on Wednesday showed a third consecutive large weekly build and the markets broke below prior support. Friday saw an attempt at a recovery with the price managing to close higher, but they have come back under pressure at the start of the week with Oil.WTI taking out last week’s low this afternoon. The new low of 68.48 is the lowest level in over a month and threatens to mark the start of another leg lower.
We are just 6 days from the presidential election runoff in Brazil and all the polls suggest a decisive Bolsonaro win. Jair Bolsonaro has risen on anticorruption campaign and has been seen as market friendly by the markets. His strong result in the first round caused a rally in Brazilian equities, had the real surging and caused a spike in coffee and sugar prices along the way. Bovespa (BRAComp), up 1.1% today, is just below the key resistance zone of 88000 points while the USDBRL is fighting with a support of 3.70.
There’s some mild selling seen in the crypto space today, with all 5 markets in the red. Litecoin is the biggest loser and has fallen back to trade at 52 once more. On the fundamental front, Maqta Gateway, being a subsidiary of Abu Dhabi Ports, announced that it started implementing a blockchain-based supply chain pilot project in cooperation with the Port of Antwerp (Belgium). The project called Silsal is considered as the first “blockchain-based solution to be developed locally by an Abu Dhabi local entity”, as Abu Dhabi Ports reported. According to the press release, the new solution provides “seamless and secure link between stakeholders across the trade community using the electronic ledger system”.
