FX Breakout Monitor: Sterling and Scandies on the rocks

Forex 3 minutes to read

John Hardy

Head of FX Strategy

Summary:  The recent slow slide in sterling took on considerable energy today as noise from both the UK and EU side show no progress and Boris Johnson and his team seem willing to trigger a No Deal Brexit in defiance of Parliament. Elsewhere, the risk-off from the spike in Brexit concerns is hitting EM and the Scandies are also on the defensive with new breakouts lower versus the euro.


The FX Breakout Monitor is back, and it is expanded with "autosignals" that show examples of how to trade new breakouts, defined as new 19-day high or low closes not preceded by a breakout in the same direction in the prior week. Click on the link below for a look at the full PDF of the table overview and the Recent New Breakouts tables. See further below for a couple of chart highlights related to today's monitor.

Today’s Breakout monitor
We’re picking up a bit more energy around the edges of the Breakout Monitor in recent days, as the Scandies (SEK and NOK) have been taken to new 19-day lows versus the Euro and EURSEK closed at a new multi-year high for the cycle yesterday. And today, if sterling closes near where it is trading as of this writing, it will have also cleared a new 19-day low versus the euro and the yen that could prove the start of a significant breakdown.

The US dollar continues to keep its intentions unknown. USDCAD broke back higher recently, as we pointed out, nominally posting a new 19-day high, but so far having failed  to clear the range. Elsewhere, the USD picture is generally muddled, though today we did see a significant move lower in EM as the sudden aggravation of Brexit worries and a headline that the White House is looking to eliminate Chinese stocks from government funds (federal pension funds?) doesn’t look like a good sign ahead of US-China talks set to start on Thursday. EM weakness was led by a steep TRY sell-off to a new 19-day high close yesterday after bellicose threats from Trump to “destroy and obliterate the Economy of Turkey” if Turkey made any move deemed wrong by the Trump administration in Syria. USDTRY is also threatening a new 49-day high today.

Today’s Breakout Highlight: GBPJPY
GBPJPY is poking below its 19-day low daily close of 131.84 today, trading below 130.50 at one point as concerns rise that we are headed for a hard, chaotic, No Deal Brexit at the end of this month after signals from both the UK and the EU that negotiations are leading nowhere at the moment. Note that the price action has taken us to the line that was the previous break-out line to the upside back in early September, which led to a very successful run higher for break-out traders.

Source: Saxo Bank

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

International

Trade responsibly
All trading carries risk. 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

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.