Afternoon Market Update – 27/02/2017 – by Jazz Singh

Political risk takes centre stage again as French election polls give a boost to the Euro, while the prospect of a second Scottish referendum puts downward pressure on pound sterling. The euro has gained some 0.2 percent vs the dollar as Le Pen loses ground in the most recent polls. With Scotland’s vote to remain in the EU overpowered by the rest of the UK a second Scottish referendum has been on the cards since the Brexit vote. Declining over 80 pips against the dollar, any confirmation of a Scottish independence vote should see further selling pressure for the pound coupled with uncertainty surrounding Brexit negotiations. The dollar index remains flat for the session as we await a speech from President Trump to congress tomorrow. The major European bourses have extended their sell off from Friday, with the DAX testing the 11800 handle to the downside multiple times this morning. A similar picture is developing in US equity futures which are pointing to declines at the cash open. Looking to the commodity complex we see gold is little changed for the session while crude oil has been well bid; gaining over 0.7 percent today, WTI is looking for another test of the $55 handle to the upside. We have some tier 1 data this afternoon in the form of US durable goods orders at 13:30 GMT. Fed’s Kaplan is also due to speak just before the European markets close at 16:00 GMT.