Risk sentiment improves as new week kicks off

Summary:

• Equities and Antipodean currencies gain momentum at the beginning of the new week
• May threatens to give up trying to get Brexit done if her deal gets no support
• A meeting between Trump and Xi likely to be postponed until June

Risk-on

The beginning of Monday’s trading is bringing healthy increases across Asian equity markets - Shanghai Composite is rising 1.8% while the Hang Seng is climbing 1% at the time of writing. In part, it could be an effect of a green session on Wall Street and in Europe on Friday. Positive sentiment is also seen in the currency market where both AUD and NZD are leading the gains (up 0.4% and 0.3% respectively). It is worth noting that the latest CFTC data, released on Friday, showed that hedge funds and speculators had increased net long contracts on the New Zealand dollar substantially reaching the highest level since June last year. Over Asian hours trading we got several reading from the Japanese economy. Firstly, the trade data for February showed a 339 billion JPY surplus, above the consensus value of 305.1 billion JPY. Exports declined 1.2% YoY while imports slid 6.7% YoY - both figures missed forecasts. Secondly, the final reading of industrial production for January produced a 3.4% MoM fall. Note that the data seems to be in line with hideous numbers regarding machine tool orders we got last week.

The SP500 (US500) closed the last week with a huge bullish white candlestick. Note that the price managed to stay above 50WMA which could be a signal of strength for bulls. Source: xStation5

Brexit talks continue

Over the weekend Theresa May continued talks with the DUP and some members of her own party as she seeked support for her deal to be voted later this week (Tuesday or Wednesday). It is worth stressing that a vote will take place if a win for May’s deal looks likely, according to Hammond. Meanwhile, Prime Minister May threatened to give up trying to get Brexit done any time soon unless eurospekticss in her Conservative party back down and promise to vote for her deal this week, as Bloomberg reports. The talks are expected to be continued today. Keep in mind that Theresa May needs both parties (Conservative Party and DUP) to be on board if her deal is to be passed by the House of Commons. In an article for the Sunday Telegraph May wrote that if the Parliament cannot find a way to back the Brexit deal before the European Council summit, the UK would not leave the EU for many months, if ever. Note that Jeremy Corbyn, leader of the Labour opposition, said his party would trigger a vote of no confidence in May and attempt to force a general election if May’s deal is defeated again.

The GBPUSD is struggling with the important resistant at around 1.33. Technically this level looks critical for bulls if they want to continue pushing up. Source: xStation5

In the other news:

• A meeting between Donald Trump and Xi Jinping aimed at finalizing a trade agreement may be postponed to June, sources said

• Russia has started to cut of crude production by 140 kbpd, Russian Energy Minister Novak said

• The US Department of Transport investigates the approval of Boeing’s 737 Max by the Federal Aviation Administration, WSJ reports