background image

NY Open: Cable all over the map on Brexit breakdown

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  The US economy remains on track with a mixed-to-positive Retail Sales print, but the same can't be said for the British currency, which is reeling on a flurry of Brexit headlines.


First off, let's look at the stateside data being overlooked in favour of the GBPUSD trade: Americans went shopping in October. Retail Sales rose 0.8%, beating the 0.5% forecast and well above September’s decline of 0.1%. The stellar results were tarnished by downward revisions to the September and August data, but keep the US economic growth story on track.
Retail and Food Services
Source: US Census Bureau
Walmart (WMT: NYSE) supported the rise in Retail Sales, but traders didn’t seem impressed with the company's quarterly results. The Beast of Bentonville's shares are trading down 0.52% as of 14:00 GMT despite the firm recording higher quarterly sales and raising its profit outlook for the fiscal year ending in January.

The DJIA, S&P 500 and Nasdaq indices are trading with small losses.

The US dollar has ceded ground since opening in New York, albeit marginally. The major focus is Brexit with traders keeping an eye on US/China trade developments, oil, and Wall Street. Tory MP Jacob Rees-Mogg called for a vote of no-confidence, which put fact to the earlier rumours.

GBPUSD, at 1.2800, is above the 1.2753 low reached when Brexit Minister Dominic Raab resigned. Technically, the move below 1.2888, representing the 61.8% Fibonacci retracement level of the 2017-2018 range, opens the door to further losses to 1.2540. However, GBPUSD trading is a headline-driven crap-shoot, requiring very deep pockets, nimble fingers, and an inside track to political news.

FX risk sentiment is still slightly positive with traders digesting news of China’s overture suggesting a renewed effort to resolve the trade dispute. Traders are also emboldened by yesterday’s comments from Federal Reserve chair Jerome Powell. His warning that the economy could face headwinds suggested a tempering of the pace of US rate increases.
GBPUSD 15-minute
GBPUSD (15-minute, source: Saxo Bank)

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.