Sterling plunges, dollar advances
Sterling slumped 1% against the USD last night to 1.2840 area - the lowest level ever seen in over three decades. The UK Prime Minister’s announcement to trigger Article 50 in March next year has started the fast-approaching count down for officially starting the Brexit negotiations. The pledge by the PM Theresa May means the UK will leave the EU by spring 2019.With a clearer time table, she has brought on more certainties and plans for the two-year negotiation process to leave the EU. However, market is carefully assessing the impact of that, especially with regards to the country’s currency. The immediate support level for GBP/USD is at around 1.2800 area.
GBP/EUR has also reached a three-year low at 1.146, breaking down key support level of 1.1500, despite UK surpassing their manufacturing PMI readings when it came out last night.
RBA and RBI rate decisions to be watched
Today, the market is waiting for interest rate decisions from Reserve Bank of Australia (RBA) and Reserve Bank of India (RBI). RBA’s new governor Philip Lowe is expected to hold interest rates unchanged at 1.50% this time. AUD/USD is traded at 0.7685 area this morning.
USD/JPY has soared to above 102.0 level this morning. The weakening in sterling and yen led to a stronger US dollar, which will then send pressure towards commodities, gold and silver prices. Gold and silver has been consolidating over the last week and with this new pressure, we look to see if this trend will continue. The immediate support levels for gold and silver are at $1,300 and $18.50 area.
As the market distills the good news on the OPEC output freeze, crude oil prices may face some pressure in the coming days and US dollar continues to strengthen. For WTI Nov contract, the immediate resistance level is at $48.62 and $49.25 respectively. Traders will also closely watch the weekly DoE crude inventory data on Wednesday to access the supply-demand mechanism.
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