Traders eagerly await key Brexit vote; USD gains despite soft data

Summary:

  • UK parliament to vote on PM May’s Brexit deal this evening (around 8PM GMT)

  • USD remains higher despite soft data

  • JP Morgan misses forecasts on both top and bottom line

  • HSBC settled forex trades worth $250b using blockchain

  • Top 3 charts of the week: USDIDX, Oil, W20

 

After a delay of more than a month, today’s the day that Theresa May’s Brexit deal will finally be put to parliament in what is widely expected to be a heavy defeat for the PM. Unsurprisingly, UK markets are trading cautiously ahead of the event with some selling seen in the GBPUSD in the past few hours with cable dropping below the $1.28 handle. The UK100 has caught a bid into the European close and is looking to snap a 2-day losing streak.

 

On the economic calendar two of the biggest events today have come from the US, with both the latest look at inflationary pressures and manufacturing activity coming in worse than expected. The December PPI Y/Y came in at 2.5% as expected and also in line with the prior reading. However, the M/M figure disappointed (-0.2% vs -0.1% exp) but perhaps more importantly the core reading were significantly worse. In Y/Y terms the ex food and energy fell to 2.7% against consensus forecasts for 3.0% and in M/M terms it unexpectedly declined, showing -0.1% compared to 0.2% expected and 0.3% prior.

 

Banks have been in focus this week as they report their results for the 4th quarter and before this afternoon’s cash session JP Morgan have delivered a pretty downbeat set of figures. The bank missed on both the top and bottom line with revenue of $26.1B below the $26.7B expected and EPS of $1.98 significantly lower than the consensus analyst forecast of $2.21. This is the 1st time in 15 quarters that JP Morgan has missed profit expectations. The stock opened lower by over 2% but there’s been a bounce since and the market is now back to little changed from Monday’s close.

 

It’s been a day of selling in the cryptocurrency space and according to CoinMarketCap, the capitalization of the cryptocurrency market stands around the $123 billion handle while the capitalization of altcoins sitting a little below the $60 billion mark. HSBC, one of the world’s largest banks, settled forex deals worth $250 billion last year using blockhain, as it said on Monday. The British bank settled over 3 million FX trades and made 150 thousands of payments using blockchain technology. Although, the bank did not reveal the same information related to FX trades being settled in a traditional way, it said that blockchain-settled deals represented only a small part. Nevertheless, such data and figures may be another evidence that blockchain technology is gaining larger and larger adoption among financial institutions.

 

Our top 3 charts of the week focus on USDIDX, Oil and W20 and can be viewed in more detail here.

 

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