The Week Ahead: Extra Time

Brexit deadline could be more dynamic than ever

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GBPCHF Struggles on No-Deal Prospect

Trading the pound Sterling certainly is not for the faint-hearted these days. With only two weeks to go before the end of the transition period, London and Brussels are yet to clinch a deal.

While a hard Brexit has become a reality by default – a synonym for the pound’s demise, extending the deadline could be the last and pretty familiar resort. Don’t be surprised if the pound’s quote swings around in the next few days. Traders are still trying to take the right side before closing the book for the year.

The pair is falling towards the major support level of 1.1600. Below that, 1.13s could become the next pricing range.

USDCAD Softens to 2018 Lows

The US dollar’s downward spiral may last longer than bulls can hold their breath. There is no sign of a meaningful rebound yet, whether fundamental or technical wise.

The Federal Reserve is expected to refrain from additional measures, even if the Treasury’s fiscal stimulus might not be under the Christmas tree this year. The central bank may issue marginal tweaks to its guidance. However, the lack of a hawkish tone will probably keep the greenback as a target for bearish trend followers.

The pair is heading towards April 2018’s low of 1.2540. Any bounce will stay temporary unless it can lift offers around 1.3000.

EURNZD Weakens as Risk-Taking Prevails

The latest rally in the euro could be short-lived as investors’ mood still favors growth-related assets. Any correction in the kiwi is seen as a buying opportunity, as recent troughs were followed by new tops. A recovering Chinese economy and rising commodity prices have offered effective tailwinds to New Zealand.

As the pair is tanking towards this year’s lows, traders are looking for more catalysts to push even further. That could be the case if New Zealand’s growth figure shows resilience this Wednesday.

1.7000 acts as a psychological support level but a bearish breakout could send the exchange rate to 1.6800.

AUDCAD Climbs on Recovery Optimism

Despite souring relations with China, which is rolling out tariffs on a number of Australian exports, the Aussie still keeps its lead across the board.

As global optimism reached a new high following the release of the Covid vaccine, risk-on sentiment has sent asset prices into over-bought territories. Surging commodity prices and the RBA’s firm stance in keeping the rates intact have helped the country’s currency consolidate its gains.

Should Australia’s jobs data show signs of improvement this week, the pair may finally rise above the triple top of 0.9650.

In the case of a retracement, 0.9460 is a key support to maintain the bullish mood.

 

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