A huge week ahead with the Fed meeting and a market expectation of an immediate rate cut and plans for more to follow. 

But to start the week it’s all very muted. Monday sees little follow through for crypto after the weekend spike lower. BTC begins the US day almost unchanged from Sunday, just below $9,500. 

ETH is similarly quiet around $208.60. Seems like a market that is reluctant to play, aside from a few players trying to muscle some moves over an illiquid weekend.

As for FX, as mentioned, it’s all about the Fed on Wednesday. What will they do and say and how will the market react? This all against a background of a US administration that has just started to talk about intervening to weaken the USD

It should be a very interesting period ahead but potentially quiet until the rate announcement. We start the week almost unchanged from Friday’s close, the only real mover being GBPUSD, as it slides to 1.2220 on fears of a no-deal Brexit. 

The EU seems reluctant to renegotiate and the new PM seems determined that it must be or leave with no deal. 

AUD finally breaks 0.6900 and USDJPY is up to 108.85. EUR still seems glued to 1.1130. 

US equities start the day mixed. European bourses are predominantly green with the FTSE 100 rather ironically leading the way up over 2%. What the FX market hates, apparently the equity market loves. 

As the day draws to a close, we have a small squeeze in EURUSD up to 1.1150 but GBP remains a couple of points off its lows. 

AUD had no follow through under 0.6900 but the bounce was also limited. For stocks, only the DJ would show a gain on the day with both the S&P and Nasdaq closing lower. Gold rallied up to $1,427 an ounce and the US 10Y yield dropped to 2.06%.

The big mover on the day has been GBP so let’s look again at GBPUSD

Today’s chart is a weekly one because I want to highlight where we are in historical terms. We have two major support levels close by, 1.2109 and 1.1986. 

Depending on your data source, there was a flash crash in October 2016, which on this chart only picks up a low of around 1.2000. Given the nature of the move, I’m happy to go with that. The point is, we are at critical long-term levels, staring at the very real possibility that the UK will leave Europe, with no deal in place with likely very negative consequences for the economy. Expect more volatility ahead. 

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David Hannigan

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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