Morning market update

Prime Minister Theresa May announced that she will appoint a “no deal Cabinet Minister” who will be placed alongside Brexit Secretary David Davis while the pound is taking advantage of the once again weaker dollar following NFP data.

Markets across Europe look set to continue the positive start to 2018 into a second week with FTSE futures pointing to a strong leap out of the blocks, pushing towards yet anther all time high. The move was also supported by a slightly weaker pound as Brexit headlines over the weekend unnerved traders at the beginning of the trading week.  

Pound weaker as Theresa May to appoint no deal minister 

Prime Minister Theresa May announced that she will appoint a “no deal Cabinet Minister” who will be placed alongside Brexit Secretary David Davis. The appointed minister will be responsible to updating Theresa May on preparations for leaving the EU without a trade deal. This could be interpreted and an increased possibility of the UK experiencing a hard Brexit, however so far the market is taking the news in its stride and any sell off has been marginal. 

Last Week’s NFP weighs on dollar 

Instead, the pound is taking advantage of the once again weaker dollar. Any reversal of the weaker dollar is looking increasingly more difficult, especially after the softer than forecast non-farm payrolls on Friday. The US jobs report showed that the US added just 148,000 new jobs in December, short of the 190,000 forecast. The unemployment rate remained steady at 4.1% yet wages crawled higher, in line with expectation. Whilst the readings were soft they were by no means a game changer and the dollar weakened as a result. The EUR/USD spiked to a peak of $1.2082, before pulling lower. 

Eurozone retail in focus 

Investors will now turn their attention to eurozone retail sales for clues on direction for the EUR/USD. Eurozone retail sales re expected to come in at 1.3% month on month in November and 2.4% year on year. After October revealed some very lacklustre retail sales figures and after inflation data on Friday, showed that the eurozone inflation figure was moving away from the European Central Bank target of 2%, investors will be particularly keen to see an encouraging reading. Signs that spending is picking up in the eurozone could see the euro look to attack the $1.2100 level, a high for 2015 and 2017. 

A strong read could also add to stock market optimism and add to the Dax 1.1% gain on Friday and help push the German index back towards its all-time high. On the other hand, a disappointing read could see the euro tumble back firmly below $1.20 

Bitcoin in consolidation mode 

After its phenomenal rally in 2017, bitcoin appears to be in consolidation mode so far in 2018. The crypto currency is at a cross road at the $16000 mark, awaiting further directional clues. There have been reports of Peter Thiel’s Founder Fund has brought millions of dollars worth of bitcoin, which has fuelled a recovery in the virtual currency. This is important because Thiel is a Pay-Pal co-founder as well as an early investor in Facebook. So when Peter Thiel makes a move, the industry stands up and takes notice. 

Technically a break above $16500, could see Bitcoin bulls firmly take back the reins, meanwhile on the downside heavy support is seen at $13,800 the $12,500. A move below the latter price could indicate that the market is very much at risk.

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