Brussels Wild Whipsaw
A wild whipsawing session for both Forex and stock Indices overnight as news of yet more terrorism in Europe hit the newswires.
At least 31 people were killed in Brussels, Belgium as terrorists detonated bombs in the public passenger hall of Brussels airport and in a local subway station.
These horrible incidents follow the Paris terrorist attacks back in November… While no doubt adding to to European security concerns around the issue of migration, the affect on markets could be muted. This just happens too much now for it to be a sustained market moving event. Sad but true, but the focus stays elsewhere.
“So at the turn of the year the Australian economy seemed to have been picking up. That’s a good starting point. In the case of business surveys, better conditions seem generally to have continued in the early part of 2016, though labour market data have been more ambiguous.”
“Even with interest rates at already low levels, and public debt higher than it was, there would, in the event of a serious economic downturn, be more room to ease both monetary and fiscal policy than in many, indeed most, other countries.”
What we were looking for ourselves yesterday:
“As it’s a weekly resistance level, the hourly price action of a possible breakout then retest might not be as clean as the textbooks would lead you to believe, but the level is there to plan playing from the long side if you’re that way inclined.”
While wanting to play from the long side, the hourly level was never expected to be cleanly respected as it was also a weekly resistance zone.
Throw in a central banker’s speech, a terrorist attack and the risks were always there. But the level held and the bounce was complete by the end of the night.
Higher from here?
Chart of the Day:
The British Pound was the major loser overnight following the Brussels attack, as speculation that Brexit campaign momentum will now increase.
With immigration and what to do with the influx of refugees and economic migrants front and centre of British politics when it comes to staying in the EU, any events that add to the argument against immigration and the free movement of people throughout European borders just adds fuel to the Brexit fire.
Not to mention last night’s GBP inflation number continuing to underwhelm:
“GBP CPI y/y (0.3% v 0.4% expected)”
The BoE just can’t raise rates while inflation prints these sorts of numbers over and over. Add this to the terrorism/migration headlines that we are going to continue to see printed front and centre and the Pound is likely to stay under pressure.
So what about the charts?
The 15 minute shows the intraday support level that broke HARD overnight.
In the context of the bigger picture, you can see that possibly this was the final retest after breaking major weekly support?
I continue to be bearish GBP and have a technical analysis blog in the works explaining why.
On the Calendar Wednesday:
CAD Annual Budget Release
USD Crude Oil Inventories
Dane Williams – @VantageFX
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