The Kiwi continues to be in good shape, with NZD / USD looking firmly determined to stay above 0.64, but the main focus remains on the pound trade.
Looking ahead, the news around Brexit will again dominate the trading routine as we move closer to the bill to leave the UK for the EU. There is not much news on the economic calendar, so traders will focus on cash flow and sentiment risk. Strong sessions on Wall Street and then Asia suggest that a good session is also emerging in Europe, where major stock indexes will start to rise. There is little noticeable withdrawal of smart money from gold and the yen at the moment, emphasizing the fragile optimism of market players. Beyond Brexit, trade rhetoric remains at the forefront, with any speculation on either of these topics being sufficient to pre-empt movements and direct cash flows to risk or hedging instruments.
We are also in the midst of the busiest week of the corporate calendar, with many big names publishing their reports, which will also give expression to the indices.
As things stand today, technology and banking stocks (those that are cyclical and directly dependent on the overall state of the economy) will benefit and I expect a strong start to trade. But they are also the first to signal a looming danger, so their movements early in the day can reveal the true intentions of smart money.
Trader Aleksandar Kumanov