EUR Resilient Despite German Slowdown, OPEC Inspires Oil Bounce - US Market Open

2018-11-14 14:30:00

MARKET DEVELOPMENT – GBP VOLATILITY CONTINUES, EUR RESILIENT DESPITE GERMAN GDP CONTRACTION

GBP: Volatility is here to stay for the Pound with O/n vols via options suggesting break-evens of 148pips, while 1-week vols are implying a break-even of 228pips. Headline risk will continue to remain elevated as the Brexit cabinet meeting takes place. In the last 10 minutes, reports have suggested that Two MPs from the cabinet will resign today, briefly weighing on the Pound.

Elsewhere, subdued UK CPI figures failed to provide much in the way of price action with the majority of the attention for GBP traders on Brexit.

EUR: The Euro remains somewhat resilient in the face of the evident slowdown seen in Germany, with the country report a contraction in GDP for the first time since 2015. Elsewhere, Italian politics continues to keep the outlook for the Euro somewhat cautious with EU set to respond to the resubmitted budget proposal on November 21st. Given the lack of changes made the budget with the deficit target remaining at 2.4%, it is likely that the EU will continue to express its negative view on the budget.

Crude Oil: Yesterday saw oil prices extend its record losing streak, having dropped for a 12th consecutive session following the biggest price decline (Over 7%) since 2014. This morning, the oil complex has seen a much-needed reprieve amid some timely verbal intervention from OPEC, in which sources noted that the cartel may consider a 1.4mbpd production cut.