Action Insight Weekly Report 1-13-19
Sentiments Saved as Fed Powell Turned Cautious, China Stepped Up Supporting Measures | Action Insight Weekly Report 1-13-19 | | Brexit to Take the Spotlight from Fed, Trade War and US Government Shutdown |  Risk sentiments continued to recover last week as Fed officials indicated they would be patient before making the next rate move. Positive developments of US-China trade talks also helped. One notable development was the rebound in US treasury yields as 10-year yield reclaimed 2.7 while 30-year yield is back above 3.0. Japan 10-year JGB yield also turned positive These are signs of stabilization in the financial markets. The recording setting government shutdown in the US is so far having little impact on the markets too. As a result, Yen ended as the weakest one for the week, followed by Dollar, and then Swiss Franc. New Zealand Dollar was the strongest, followed by Australian Dollar. This is a rather reasonable result of return of risk appetite. Sterling ended as the third strongest as the Brexit parliamentary vote is approaching and the chance of no-Brexit is rising. Canadian Dollar was also strong, but it suffered some setback as oil prices pullback quite notably on Friday. Brexit is set to be the major focus this week. | GBP/USD Weekly Outlook GBP/USD's rebound from 1.2391 extended to as high as 1.2865 last week and broke a.2814 resistance. The development now suggests that such rebound is correcting whole down trend from 1.4376. Initial bias remains on the upside this week for 1.3174 resistance, which is close to 38.2% retracement of 1.4376 to 1.2391 at 1.3149. We'd expect strong resistance from there to limit upside, at least on first attempt. On the downside, break of 1.2709 minor support will argue that such rebound is completed and turn bias back to the downside for retesting 1.2391 low. |  | | | |
