Currency markets stuck in neutral

British pound, Indonesian rupiah under pressure

Despite a rather noisy week, with impressive intra-day ranges seen, the week’s close was a neutral one, with most G-10 currencies confined within their weekly trading ranges. The dollar index barely moved, closing down 0.09% at 93.27. The story was much the same in the regional Asian space, which mostly contented themselves with consolidating gains versus the US dollar in recent weeks.

Sterling was a notable exception though, as rapidly increasing Brexit concerns saw a weekly close below its six-month trendline support, today at 1.2910. The GBP/USD finished just 10 points lower on Friday at 1.2790. The technical picture is ominous now, with resistance at 1.2910, and support lying between its 100 and 200-day moving averages (DMA) at 1.2695 and 1.2735. A daily close below this zone signals deeper losses ahead. The British pound sell-off has been entirely driven by politics thus far but is unlikely to receive any help from the Bank of England, which may talk negative rates on Thursday. Sterling is likely to remain as popular as that great British delicacy, jellied eels, this week.

The Indonesian rupiah is another one to watch, closing near to 15,000.00 to the US dollar, at 14,900 on Friday. Jakarta’s new lockdown and mixed signals from the central government on that front, could mean that the Bank of Indonesia will have to intervene aggressively, yet again, to support the currency today. With a BI rate decision on Thursday as well, this week promises to be a tough one for both the central bank and the currency.

With equities off to a positive start this week, and robust China data expected yet again after impressive aggregate financing data on Friday, pro-cyclical Australian and New Zealand dollars, as well as Asian regional currencies should outperform in today’s session.

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley