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Risk Maintains Gains Post FOMC, UK Election and ECB to come

jeffriess
December 12, 2019
by Joseph Jeffriess, Market Analyst

Risk maintains demand after FOMC, traders will move focus to tonight’s upcoming UK Election and ECB rates decision.

After the Fed sent the USD sharply lower and risk majors higher, we’ve seen a continuation on in today’s Asian session with the AUD, EUR, and GBP continuing to trade higher to the USD and JPY.

The GBPUSD standing out adding 0.24% as well as touching new 9-month highs. The GBPJPY has also been the main mover on the yen side adding 0.22%.

Asian stocks remain mixed with the ASX200 trading in the red down 0.64% while the Nikkei is trading in the green, up 0.33%

Now we’ve passed the FOMC, our trading week doesn’t get any quieter as we head to the UK election and ECB rates decision and rates statement tonight.

Current UK Polls, Conservatives 43, labour 33. The GBP has been rallying on hopes of a conservative win so it’s not too much surprise to see the GBP strength so far today.  The Conservatives are seen to have a likely range between 39-47 and Labour 29-37, these are estimates and we’ve seen some strange election happenings in recent history so we will be watching closely. The chance of Labour winning is seen as low by most political commentators but a win or a hung parliament could be very damaging for the current GBP rally. General polling opens 7 am UK time (6 pm AEDT) and closes 10 pm UK time (9 am AEDT).

The ECB meets at 11:30 pm tonight AEDT, the refinancing rate is expected to remain on hold at 0.00%, traders will be looking to the statement for future clues. With this week positive Zew data will the stance remain in a holding phase, new stimulus?

Notable mention, the SNB meets at 7:30 pm AEDT for their monetary policy assessment and policy rate, it’s also expected to remain on hold at -.75%

With the importance of Brexit, we think most traders will be focused on tonight’s UK election and it’s outcome and how that going to shape the exit and the short to medium direction of the sterling.

Good trading from Eightcap.
All times are AEDT.