USDJPY Jumps As UK Rejects No-Deal Brexit

UK

The UK parliament rejected a no-deal Brexit on Thursday evening. This leads to speculation that the UK might formally ask the EU for an extension to the March 29 Brexit deadline, putting further uncertainty into the UK’s exit from the EU. However, the news sent the British pound surging.

Europe

The eurozone’s industrial production figures improved as activity expanded at a pace of 1.4% on a month over month basis in January. This beat expectations of a 1.0% increase. And, the January’s gains reversed the declines of 0.8% in December.

US

Data from the U.S. showed core durable goods orders falling 0.1% against estimates of a 0.1% increase. Meanwhile, headline durable goods orders rose 0.4% against estimates of a 0.5% decline. The durable goods orders rose for a third consecutive month in January. But, the pace of increase was slower compared to that of December at 1.3%.

Producer prices index data showed a 0.1% increase compared to estimates of a 0.2% increase. Core PPI was up 0.1% again, missing estimates of a 0.2% increase for February. Construction spending was up 1.3% in January, beating conservative estimates of a 0.4% increase. This was up from a 0.8% decline from the month before.

The US dollar, however, traded weaker despite the strong economic reports.

Asian Session

The Asian trading session today showed that China’s industrial production rose 5.3% in the first two months of the year. This was a slower pace of increase compared to the forecasts of a 5.5% increase. Retail sales in China rose 8.2%, marking the same pace of increase as the month before.

Today’s Schedule

The European trading session will see the release of the final monthly CPI figures from Germany. Economists forecast that inflation will rise 0.5% on the month, the same as the flash estimates. French inflation is due later today, and we expect it to show an unchanged print.

The NY trading session will see the release of the import price data. Import prices are expected to rise 0.3% on the month, following a 0.5% decline previously. This is later followed by the new home sales report which is expected to show a modest increase of 622k, up from 621k previously.

EURUSD Intraday Analysis

EURUSD (1.1316): The EURUSD currency maintained gains as price action rallied to highs of 1.1327 – 1.1309. With the resistance level likely holding the gains, the common currency could push lower. A retest of the minor support at 1.1256 may establish in the near term. As long as this support holds, the bias remains to the upside, subject to the EURUSD breaking past the resistance level. This will potentially shift the bias to the upside with the next target coming in at 1.1400.

USDJPY Intraday Analysis

USDJPY (111.58): The USDJPY, after a brief consolidation near 111.21 is extending the gains to the upside. Price action is close to test the previously breached support at 111.70 level. Establishing resistance at this level could potentially see the currency pair reversing direction. In the near term, USDJPY could trade sideways within 111.70 and 111.21 levels. A downside breakout will accelerate the declines toward 109.74 level of support.

XAUUSD Intraday Analysis

XAUUSD (1304.08): Gold prices advanced on Wednesday as price action tested highs of 1308. However, by early this morning in the Asian trading session, the precious metal gave up the gains. A reversal today could potentially see gold prices extending the declines lower. The lower target is at 1290.40 where support will be tested more firmly. Alternately, if prices maintain support near the current level of 1304.11, then we could expect to see further gains. These could push gold prices to test the previously breached support level at the 1322 – 1319 region, where resistance is pending a retest.