Eurozone ZEW Better Than Expected
The FX market traded with a muted tone over the European morning on Tuesday. The only notable data print was the Eurozone ZEW economic survey which came in slightly better than expected at -15.1, though remained in negative territory. For now, EURUSD is still pushing to break above yesterday’s session highs of 1.1319.
Third Brexit Vote Blocked
In the UK, the Speaker of the House of Commons blocked a third parliamentary vote on Brexit ahead of the March 29th deadline. The EU is due to discuss the UK’s Article 50 extension request at a summit on Thursday.
If granted, we will see the Brexit deadline postponed. GBP retains a bid tone, pressuring 1.30 resistance, as the market now expects the March 29th deadline to be pushed back accordingly.
Fed Expected To Reaffirm “Wait and See” Mode
The US Dollar was lower again today as positioning adjustments ahead of the FOMC meeting on Wednesday keep the greenback pressured. In line with its last meeting, as well as commentary from Fed chairman Powell, the market is not expecting much upward support for USD from the Fed this week.
Concerns over global growth as well as the lingering uncertainty around world trade will likely see a mostly unchanged statement from the Fed which looks set to keep rates on hold for the near future.
A weaker US Dollar is helping keep equity prices firm. Both the S&P and FTSE100 traded to fresh 2019 highs this week breaking above 2830.68 and 7264.2 respectively. With monetary policy looking likely to be unchanged, alongside optimism over an eventual US/China trade deal, risk appetite remains buoyant. These improved risk flows have stymied upside in gold.
This has seen a lack of safe haven demand this week, stopping it from fully capitalizing on a weaker US Dollar and yet to break above yesterday’s 1310.80 highs. Looking ahead, a quiet US data sheet is likely to see the current USD drift continue lower keeping the rest of the G10 mildly supported over the day.