After a quiet Monday calendar when markets digested Friday’s swearing of Donald Trump for president when US dollar lost against most majors, we enter the session from January 24 (Tuesday). Agenda of macroeconomic publications is mainly based on the January data on the PMI by Markit IHS. In addition, after 10:30 will be published in the British Supreme Court decision regarding further proceedings regarding Brexit.
Preliminary readings for January still strong?
The first publications PMI industrial and collective will appear from 09:00 – 10:00 then we will know the common values for the whole euro area. For further important publications we shall wait until 15:45 – only then IHS Markit will share managers sales index in the US, and fifteen minutes later will appear December data on sales of existing homes:
Article 50 shall enter into force? What next with Brexit?
Another highlight of Tuesday’s session, which undoubtedly will attract the attention of market observers is the decision of the Supreme Court in the UK, which will announce its decision regarding the European Article 50 – which allows to implement the process of leaving the Member State from the EU community.
The decision should arise up to 10 minutes after the end of court sessions
- If the Supreme Court does not accept Article 50, the Prime Minister May will have to get parliamentary approval to launch it – so it will be necessary to prepare an additional law draft
- However, this will not stop Brexit – because the two main parties say that they respect the referendum results
- The final decision giving the Parliament the last word on the opening of negotiations should be positively welcomed by markets
- Everyone is curious what role in the process will have Scotland, Wales and Northern Ireland
According to analysts, the pound sterling should react to the decision with another, modest appreciation. Parliament – if it obtains prior approval of the Supreme Court – certainly will vote in favor of Article 50.
Kiwi offers a supply pin bar?
Analyzing situation on the major pairs with the US dollar, a very interesting situation we have on NZD/USD. Drawn from the second half of December correction beat few important resistance levels, at this point, however, faces level 61.8%, which is the golden ratio of Fibonacci abolition, supported further by the level of 0.7237 – in September served as a support, while in October and December set the monthly maxima :
Forming on Tuesday, pin bar can many times change its shape – but if it will close in current or similar form, then you should consider to play short positions. Price moved strongly away from the moving average, and one of the rules of technical analysis says that trading will sooner or later seek to return to the vicinity of MA.
The first target of declines is located 130 pips below 0.7100 level combined with the abolition of 38.2% Fibo