Intraday Market Thoughts Archives

Sterling is off the lows on news that as some Labour MPs said will back PM Theresa May's deal in today's meaningful vote in Parliament. Reports that former Brexit minister and Brexiter Dominic Raab will support May's deal have also helped the pound. US personal income and inflation were both weaker than expected and CAD GDP overshot expectations. A new USD trade has been issued moments ago.

Friday's vote won't be a full meaningful vote but it will be a valuable indicator of whether her deal still has a chance. It will likely fail but if it does, the question to ask is: what's close enough? Theresa May needs to swing 75 voters compared to MV2. If she's one vote short it's not going to be the end of this round of talks but let's say she can get it down to a margin of 15. Is that close enough to spark some negotiations and a true MV3? It likely is and the pound could pop on such a result.

At the same time, it will depend on the EU because the current extension timeline is conditional on her getting it through Parliament this week. The other obstacle is Berkow, the speaker who may not allow a fourth vote anyway.

The balance of risks is interesting. Cable touched 1.30 now and if it all falls apart the downside emerges in the 1.25-1.28 range – so call it 5 cents. But first, let's deal with the 200-DMA support near 1.2970.  The upside upwards of 1.40 – call it 10 cents. There's a big skew there but what are the odds she can get it through?

Offering to resign is the final card she had to play and it looks like it's not enough. However the progression of how we get higher or lower is also interesting. If there is a positive breakthough -- like the DUP supporting her deal -- the upside will be immediate. Whereas a negative development is less likely to come on a single headline so longs will have a better opportunity to recover than shorts.

نلقي نظرة على حال أزواج العملات الرئيسية وبالأخص الدولار الأمريكي مقابل اليوان الصيني، ولنستعد سوية لأفضل شهر في العام لتداول الداو جونز. إليكم التفاصيل في هذا الفيديو الحصري

UK PM Theresa May promised to resign if her Brexit deal passes through parliament in a final bid to make Brexit happen but the pound gave up all of its gains on renewed dissent from the DUP. The USD is up across the board with gold and silver underperforming FX vs USD. EURUSD accelerated its declines after German CPI came in at 1.3% vs exp 1.5%. Full detail on the ECB's suggested tiering approach to rates is found below.  A new trade has been posted for Premium subscribers along 2 charts & notes.

كيفية إستغلال التداول العرضي (فيديو للمشتركين فقط)

May's promise was initially met with optimism as Rees-Moog, Johnson and Duncan Smith all said they would support her deal now. However there are signs that 12-25 ERG members will still vote against it. The pound then gave back all its gains when the DUP said they would vote it down (not abstain as was hoped).

The vote will likely come on Friday so there's still time for May to lobby MPs. Her best hope might be getting some Labour MPs on side. She needed to switch 75 votes from the last round and could get as many as 60 ERG votes on her side but getting more will be a monumental challenge.

It's probably premature to wonder if there will be a MV4 if she loses by 20 or fewer votes but it can't be ruled out. At the moment, the EU's conditional deal to extend Article 50 to May 22 depends on a successful vote. They could instead demand a longer extension.

Outside of Brexit, the bond market continues to flash warning signs. There were fresh worries Wednesday from Chinese industrial profits, and the China Beige Book. US 5-year yields fell as low as 2.11% and the market is now pricing in a 78% chance of a Fed cut before year end. US 10 yr yield is bouncing off its 200-WMA after testing for the 1st time since September.

ECB Talks Tiering

In displaying European banks' displeasure with negative interest rates, the ECB floated the idea of a tiered negative rates system in order to preserve banks profitability. This would be done by setting zero interest rate to some excess reserves and not the negative interest rate, currently charged on deposits. All in all, this could be a measure by the ECB to demonstrate that it is not running out of amunition (in case the targeted LTRO does not work). If the tier system nears reality, it would imply a justification to keep rates low for longer ... at the expense of the single currency.  German 10-year yields fell 6 bps to -0.06% -- the lowest since October 2016.

US treasury yields bounced on Tuesday as risk trades returned and the yen fell across the board. But soft economic data and a strong auction raised fresh concerns. The Australian dollar was the top performer while the yen lagged. The RBNZ decision is up next--but later than the usual time. Below is the week's video for Premium subscribers outlining the next possible steps after closing all of our index shorts.

One of the big market questions is whether central banks will ease in the year ahead, specifically the Fed. The market is pricing in a 68% chance of a cut by year end. A better way to phrase the question might be: Is the economy weakening. Because with 2% growth the Fed isn't going to cut rates.

On that front, Tuesday's macro news were worrisome. US consumer confidence data from the Conference Board fell to 124.1 compared to 132.5 expected. That remains at an elevated level but it's trending in the wrong direction. At the same time, housing continues to be a drag with starts falling to 1162K in Feb from 1210K expected.

The bond market had attempted a solid bounce with yields up 5 bps across the curve but most of that was wiped out midway through the day in an extremely strong 2 year auction. The results underscore that real money is happy to receive 2.40% for two-years rather than rolling over cash rates.

Looking ahead, the RBNZ decision is at 0100 GMT. That's about 4 hours later than the usual time in a change that will put the announcement at a more-liquid time of day. The consensus is for no change from the 1.75% cash rate but there is a real possibility of dovish messaging.

The event to watch later in the day will be the indicative votes from UK parliament. They will include 16 different questions and aren't binding but could help break the deadlock. Or more likely, underscore the seemingly impossible divisions. Yet there was some fresh hope Tuesday with ERG members shifting toward May but that was countered by signs the DUP will is unwilling to compromise.

منذ آخر تحليل لي للجنيه الإسترليني منذ أسبوعين على هذه المدونة، اكتسبت العملة البريطانية أكثر من ثلاثمائة نقطة مقابل الدولار الأمريكي. لماذا حدث هذا، على الرغم من أن البرلمان البريطاني لم يقر بعد عن خطة رئيسة الوزراء “تيريزا ماي” للخروج من الاتحاد الأوروبي؟ التحليل المفصل

GBP is the strongest performing currency of the day due to 2 developments (Rees-Mog hint and PMs likely nearing a 2nd referendum). More on this below. The DAX short has been closed with a 220-pt gain. There are 7 remaining Premium trades currenty in progress, all of which are in the green.

Last night, Parliament voted to take control of the Brexit process from PM May, outlining options such as: holding a second referendum, keeping UK in the EU customs union, existing without a deal and revoking Brexit.

This morning, Brexiteer and ERG chief Jacob Rees-Mogg said expressed his readiness to back Theresa May's Brexit deal, inidcating that her plan is better than not leaving at all.

If this deal is dead, as it appears, then it's tough to envision a way for May to continue governing. It will also leave her party deeply divided in advance of a leadership contest. At best, a compromise candidate could emerge that somehow would be able to shepherd through May's deal with only cosmetic changes. More likely is a prolonging of uncertainty, another referendum or a general election.

Cable's fluctuations remain part of traders' daily order, but the formation of higher-lows over the past week maintains the balance in the bulls' favour. At this point, the market could cheer any semblance of a plan or a way forward because the bulls have little to cling to at the moment.

Looking ahead, the main data point to watch in North American trade on Tuesday will be the March consumer confidence report. All signs point to a better tone and the consensus is for a rise to 132.1 from 131.4 but it will take an especially strong report to reverse the cynicism borne of the inversion of the yield curve.

Global indices are back in the red and GBP pushes near the session high ahead of a speech from PM Theresa May due at 11:30 Eastern/15:30 London/GMT regarding the govt's next plans on Brexit-related vote. Optimism resurfaces on chatter about optimism towards a 3rd vote. All currencies are up against USD since the start of the Asian session, except for JPY and CAD. Gold and silver are at the top. Chicago Fed's Evans said it was understandable to be nervous about the inversion of the yield curve, reiterating it is time to pause on interest rates this year. The Premium short in DOW30 was closed on Friday at 25530 from Tuesday's entry at 25900 for 370-pt gain. Below is a snapshot of the  chart & tech rationale for the trade.

Over the weekend, reports of a UK Cabinet coup have circulated with May to be forced out and replaced with pro-EU deputy David Lidington.Lidington denied the report on Sunday and senior ministers rallied behind May so the coup could be put to rest quickly but the lack of cohesion suggests deep undercurrents of trouble and little prospect that May will be able to rally the support to get her deal through parliament.

May can't technically be forced out because she won a leadership challenge in December, but if Cabinet abandons her and her deal hopes evaporate then she might prefer a quiet exit. Lidington is staunchly pro-Europe so a change might be positive for the pound on hopes for a long Article 50 extension or withdrawal. Most likely he would simply be a caretaker PM until Conservatives could hold a leadership contest. That's something that could stoke a civil war within the party and lead to renewed GBP selling.

The summary of US Special Counsel Robert Mueller's report found that US President Trump's campaign did not conspire with Russia during the 2016 election. Nonetheless, attorney General Barr's summary is inconclusive as to whether Mr Trump obstructed justice.

With regards to the inversion of the yield curve: There are various ways to measure it (10y-2y, 5y-3y or 10y-3m). On Friday, yields on the US 3-month T-bill are below that of the 10-year. It may have only been a momentary blip but other parts of the curve out to 5 years are certainly inverted. Such a move preceded the past 6 US recessions by an average period of 313 days.

The inversion and huge rally in bonds from Wed-Fri belie deep worries about the global and US economy. The S&P 500 fell 54 points to close out the week with the market closing at the lows.

ماذا يمكنك أن تتعلم من صفقاتك الناجحة والخاطئة؟ انضم لندوتي الالكترونية  يوم الثلاثاء 26 مارس، 10 مساءً بتوقيت مكة المكرمة. للمشاركة من جميع الدول ما عدا السعودية للمشاركة من السعودية فقط