The House of Commons voted to delay Brexit past the March 29 deadline yesterday after failing to build a consensus for an exit from the EU. The vote was carried 413 to 202. The EU 27 will now have to agree to extend the deadline to facilitate the UK’s Parliament to come together on a deal. If the EU 27 do not agree to extend the deadline, the UK will crash out of the EU without a deal on March 29. The UK will now have to convince the EU to extend the deadline for a period of time, the UK favours a short period of 3 months, while the EU favours a longer period of over 20 months. The UK must demonstrate a clear strategy to the EU on how the extension will be used to resolve the deadlock in parliament. In other news the Bank of Japan has left rates unchanged at -0.10% this morning. The BOJ Governor Kuroda has said that the global economic slowdown is affecting Japan’s production and its exports. He said that there is a need to achieve the 2% inflation target to achieve stable prices. He added that the domestic economy continues to be robust and the economy remains in moderate expansion. The Yen remained flat against the dollar as concerns that the North Korean – US talks on denuclearisation face suspension.
Eurozone CPI data is expected to come in around 1.5% while Core CPI is forecast to also remain around its previous reading of 1.0%. In the afternoon Canadian Manufacturing sales are expected to rise from -1.3% to 0.4%. US University of Michigan Consumer Sentiment is expected to rise to 95.5 from 93.8 previously.
The USDJPY pair has remained on its upwards trajectory after consolidating around the 111.000 level. The price is now at 111.645, with potentially light support at 111.373 and stronger support at the trend line around 111.000. A loss of this area may result in a drop in price towards 110.250 or the 110.000/109.995 area. A failure to find support there might find the pair slipping to the higher low around 108.500, followed by the 107.550 area of support from early January.
Resistance around the 112.000 area may have an impact on price followed by the 112.230 level. It might be a possibility that these levels form a zone of resistance that slows or prevents price breaking higher. However a successful break of this area might push price up towards the rising resistance trend line around 112.550. Beyond this area, the 113.000 level is followed by the 113.228 area. Further advances may result in a test on 114.000 and the highs at 114.200 and 114.544.
The USDCAD pair is now trading around 1.3300, having fallen back to this support area and trend line over the last week from its high at 1.3467. If the pair manages to find support in this area, a break higher to reengage with its January high of 1.3376 may arise. Beyond this level, the aforementioned March high comes into play followed by the 1.3500 round number. From here a push towards the highs around 1.3665 may come into play with a view to breaking higher to 1.3700 and beyond.
Support at the trend line may find buyers again but the initial test on Wednesday and yesterday’s rally should have encouraged enough buyers to create a follow-through today. Instead price is back at the support level. This may result in a consolidation around this area that may end in a directional move higher or lower. A move lower may challenge support around 1.3200/1.3182 followed by the level of the higher lows at 1.3112 down to 1.3070. Below this area the 1.3000 comes into play. The lows from October feature around 1.2800/1.2782.