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08 September 2020

Geopolitics and Economic Data Put the Pound and the EUR in the Spotlight

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include German trade figures and French nonfarm payrolls ahead of the final 2nd quarter GDP numbers for the Eurozone.

With the ECB in action on Thursday, expect any downward revision to GDP numbers to have a material impact. The rest of the stats should have a relatively muted impact on the day.

At the time of writing, the EUR was down by 0.13% to $1.1802.

For the Pound

It’s a quiet day ahead on the economic calendar, following this morning’s retail sales figures. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will continue to leave the Pound in the hands of Brexit and broader market risk sentiment.

At the time of writing, the Pound was down by 0.14% to $1.3148.

For the Loonie

It’s also a quiet day ahead, with no material stats due out to provide the Loonie with direction. That will leave the market focus on Wednesday’s Bank of Canada’s monetary policy decision.

Away from the economic calendar, geopolitics, and Trump’s continued focus on China will likely remain a key driver.

At the time of writing, the Loonie was down by 0.08% to C$1.3108 against the U.S Dollar.

EUR/JPY fails at the 127.38 six-year downtrend – Commerzbank

EUR/JPY remains on the back foot while trading around 125.50, down 0.1% on a day. Therefore, the uptrend at 125.61 is being eroded and Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, is looking to the downside, specifically to the 124.34 mark.

Key quotes

“EUR/JPY is eroding trend line support at 125.61 but only just! It is also failing at the 2014-2020 resistance line at 127.38.”

“The recent high at 127.07 has been accompanied by a divergence of the daily RSI and our attention has reverted to the downside and we would allow for losses to the 124.34 10th August low.”

“Below 124.34 would target the January high at 122.88. The latter guards the July low at 120.28.”

GBP/JPY: Depressed below 140.00, eyes on Brexit talks

GBP/JPY grinds lower around 139.70, down 0.12% on a day, during the early Tuesday’s trading. The pair recently dropped amid Brexit woes as the UK’s push for altering Brexit legislation and October 15 deadline irritated the European Union (EU) policymakers. Additionally, upbeat catalysts for the Japanese yen also favor the pair’s downside.

Brexit woes please sellers ahead of Tuesday’s talks…

Having initially ignored UK PM Boris Johnson’s October 15 deadline for the Brexit trade deal, the EU policymakers started opposing the British signals to alter the divorce agreement. In the latest move, as per the UK Express, “The EU chief negotiator was left furious today about British proposals for fine-tuning customs rules. Mr. Barnier claimed to be on the brink of walking out of the negotiations on a UK-EU trade in protest at the move, accusing the Prime Minister of ripping up his promise not to allow a hard border in Northern Ireland.” The UK and the EU Brexit negotiators are scheduled to talk about the trade deals for the eighth time in London starting from Today.

Technical analysis

The pair’s clear break of the 21-day SMA and an ascending trend line from June 29 drags it towards August 21 low near 138.25.

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