European open – Brexit, gold, oil

Cautious Optimism Lifting Stocks

European stock markets are a tad higher on Tuesday, mimicking moves across Asia overnight as traders adopt a cautious optimism around Brexit and the trade war.

Source – Thomson Reuters Eikon

The Brexit saga rumbles on today as MPs debate and vote on the Withdrawal Agreement Bill (or WAB) in what is likely to be the first of a few excruciating and long sessions in Parliament. This process is all-too-familiar. I’m already having flashbacks to March and the various amendments and late evening votes. This will likely be more painful again.

From a trader’s perspective, the next few days may bring a few minor setbacks, but they’ll likely be viewed as more of an over-hyped procedural affair, that one that could derail a smooth Brexit.

Even if at the end of it, the deal is not ratified by Parliament, rather than leave us with no deal, it simply opens the door to an election, at which point a softer Brexit and even remain are back on the table. Not great for fans of public unity and the peaceful life but the currency may be a fan. Although some would certainly argue that a Corbyn-led government that delivers remain may be no more popular than no-deal.

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Gold possibly nearing a breakout

The consolidation in gold continues on Tuesday, as prices continue to hover between roughly $1,475 and $1,500. The range is tightening though which gives me some hope that price will break out soon and lead to a surge in activity. The direction of the break will be very interesting.

Gold continues to look a little vulnerable in the near-term but the correction is dragging its feet which adds a layer of doubt to this. A bearish break out of this consolidation could accelerate the move though and make gold a lot more interesting.

Gold Daily Chart

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Oil prices linger around 2019 lows

Oil prices are also in consolidation mode but continue to hover around their lows, having come under severe pressure over the last six months on global growth worries. The $56-58 area below is a major area of support for Brent which, if broken, could lead to a much sharper decline. There’s little evidence that we’re going to see this breakout yet though with prices instead just consolidating in the $56-61 range.

Brent Daily Chart

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam