GBP/USD Volatility Spikes Amid Key Brexit Talks, NZD/USD Eyes CPI - US Market Open
MARKET DEVELOPMENT –GBP/USD Volatility Spikes, NZD/USD Eyes CPI
DailyFX 2019 FX Trading Forecasts
GBP: Politics continues to drive the Pound, which trades modestly firmer after EU Chief Negotiator Barnier stated that while it will be difficult, there is still a possibility for an agreement this week. Direction in the Pound will remain headline driven in the run-up to the EU Summit with risk premium surging as option volatility spikes (GBP/USD 1-week ATM straddles at 18.4 = implied move of 258pips).
GBP/USD was largely unmoved by the UK jobs report, which showed a surprise contraction in employment (-56k vs Exp. 23k) with the unemployment ticking higher and wages dipping. Alongside this, dovish commentary from BoE’s Vlieghe in which he stated that entrenched uncertainty may require some stimulus also failed to budge the Pound.
EUR: Tepid price action in the Euro which has failed to benefit from the tailwind of Brexit optimism as key technical resistance holds in the pair. German ZEW survey showed a continued deterioration with the current conditions falling to its lowest level since April 2010.
NZD: The Kiwi is on the defensive ahead of the key NZ inflation report. Headline CPI is seen dropping to 1.4% from 1.7%, however, a reading of 1.4% would still be ahead of the RBNZ’s forecast of 1.3%.
Source: DailyFX, Refinitiv
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--- Written by Justin McQueen, Market Analyst
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