Asia Pacific Market Open Talking Points
- British Pound and Euro gain as US Dollar weakens
- US-Iran risks fade as Fed injects near-term liquidity
- Australian and New Zealand Dollar may gain ahead
British Pound and Euro Advance Against the US Dollar
The British Pound and Euro advanced against the US Dollar as Monday’s trading session came to a conclusion. Their strength could be attributed to a slew of better-than-expected European economic data earlier in the day. Markit German Composite PMI showed that the country saw growth for the first time since the third quarter of last year. This is as similar rosy readings from Markit UK Composite PMI turned positive.
The haven-linked US Dollar understandably underperformed relatively speaking as market mood cautiously improved. Investors brushed off the threat of US-Iran geopolitical escalation for now. The anti-risk Japanese Yen met a similar fate as it gave up previous strength. Sentiment-linked crude oil prices turned defensive as supply disruption woes cooled off during the Wall Street trading session. Anti-fiat gold prices trimmed gains.
Tensions between the two nations still remain elevated and do pose a threat for market mood. Meanwhile at the Federal Reserve, usage at the central bank’s overnight repo agreement amounted to $76.9b of securities. That was the highest in just over one month, though short of the $120b ceiling. These open market operations offer near-term liquidity for lenders seeking additional capital in exchange for collateral and interest.
Tuesday’s Asia Pacific Trading Session
Tuesday’s Asia Pacific session is lacking notable economic event risk, placing the focus for forex on swings in sentiment. Regional bourses may follow Wall Street higher and could offer a boost to the pro-risk Australian Dollar as the Japanese Yen weakens. December Philippine inflation data will cross the wires at 1:00 GMT, though USD/PHP arguably remains more focused on risk trends.
British Pound Technical Analysis
Taking a closer look at the GBP/USD daily chart, the rise on Monday followed what appears to have been a top under resistance at 1.3304. It is unclear at this point yet if there is further strength to be had from GBP. Resuming declines entails taking out near-term rising support from November. Though signals from IG Client Sentiment are arguing for the case to the upside at the time of this writing.
| Change in | Longs | Shorts | OI |
| Daily | 7% | 1% | 4% |
| Weekly | -7% | 25% | 3% |
Chart of the Day – GBP/USD
Chart Created Using TradingView
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
