While the 230 vote defeat is believed to be the largest in UK political history, the loss was largely expected and therefore had minimal impact on market sentiment today. The British leader’s government now faces a confidence vote. The Nikkei average fell 112.54 points, or 0.55 percent, to end at 20,442.75, the Topix index closed down 4.95 points, or 0.32 percent, at 1,537.77. It rose 12.99 points the previous day. The Hang Seng HSI, was up 0.1%, the Australian ASX 200 made a last minute rally to close at the day’s highs – up 20 points or 0.35% to 5,835.
In Europe the FTSE 100 was down 0.3% while DAX was flat and CAC40 is trading 0.22% higher. A wait-and-see mood is growing, with investors hoping to see the outcome of a vote of no confidence that the May government faces later on Wednesday. Italian Deputy Prime Minister Matteo Salvini slammed the European Central Bank, accusing it of attacking the Italian financial industry.
On the Lookout: Australian Consumer Confidence has posted its largest monthly fall in more than three years, amid falling house prices and global trade tensions. The Westpac/Melbourne Institute consumer sentiment index fell 4.7% in January to 99.6 points, pushing it below 100 points.
In macro news today we wait the US Beige Book, released along with export/import prices and the NAHB housing market index.
Trading Perspective: US dollar’s topside versus the yen is increasingly limited as it is difficult for currency market players to purchase the U.S. currency actively amid uncertainty over the impact of the partial U.S. government shutdown, which has become the longest ever. The USDJPY was almost unchanged around ¥108.60 in Tokyo trading after paring early losses thanks to repurchases. The pair is still in negative mood as cannot cross above 109 level. CME Group’s flash data for JPY futures markets noted open interest dropped by just 339 contracts on Tuesday from Monday’s final 230,051 contracts. Volume, instead, increased by around 46.1K contracts after three consecutive drops.
GBPUSD: After a rollercoaster session yesterday the pair is trading at 1.2860 after hitting the daily high at 1.2895 just shy of the round 1.29 figure, and the daily low at 1.2824 in Asian session. On the upside immediate resistance can be found at 1.2929 the January 14th high and then the high from November 2018 at 1.3072. On the flipside first support stands at the 50 hour moving average at 1.2850 and then at yesterdays low at 1.2665.