[B]Daily Fundamental Dose: 20 – March – 2017[/B]
Hello Traders,
With less accepted rate-guidance and absence of hawkish statement from US Federal Reserve, USD Bulls nursed losses and made greenback gauge post the longest losing streak since Donald Trump won Presidency. On the top of that, not so welcomed economics and Trump’s defense-oriented budget proposal provided additional weakness to the US Dollar Index (I.USDX) in flashing second consecutive weekly loss. However, investors haven’t yet lost their confidence in US economy and the Fed’s ability to provide two-more rate-hikes in 2017 which in-turn can keep nurturing upside momentum of the greenback. Meanwhile, let’s discuss this week’s economic calendar and probable impacts on Forex market.
[B]Fed Disappointed Dollar Bulls[/B]
While raft of hakish statements from FOMC policymakers and upbeat data-points favored greenback optimists to look for signals relating to more than two rate-hikes by the US Federal Reserve, the central bank disappointed those bulls when it announced first 2017 rate-lift on Wednesday. The Fed, even after praising economic improvement in US, refrained from discussing any changes in their rate-guidance which still portray three rate increases projected for current year. Moreover, mixed economics and a defense-savvy budget proposal by Mr. President gave additional reason for USD buyers to cash-out their profits.
The EUR, on the contrary, gained on Netherland’s election results whereas GBP also registered noticeable up-move after one of the BoE’s MPC members favored a rate-hike. Further, the JPY and Gold recovered some of their previous losses while commodity currencies celebrated weaker USD-fueled buying sentiment. Additionally, Crude prices marked its first positive weekly closing after US stockpile figure dropped.
Hence, Fed’s disappointment and merits at rest of the world favored safe-havens and commodity currencies while cutting down USD longs.
[B]A Bit Weaker Calendar To Be Observed This Week[/B]
As compared to last week’s heavily-filled economic plate, present week’s economic-line is a bit shorter with UK Retail Sales & CPI, EU PMIs, US Durable Goods Orders and RBNZ meeting being some of the major details to be observed.
Amongst the scheduled details, Tuesday’s UK CPI and Thursday’s Retail Sales are both likely to help GBP to extend its latest up-move towards challenging 1.2580 again while EU PMIs, up for Friday, aren’t expected to offer any noticeable EUR moves unless being drastically up or down.
For USD traders, Wednesday’s New Home Sales and Thursday’s Existing Home Sales might offer intermediate shifts in USD direction before Friday’s Durable Goods Orders provide any clear sign for short-term traders, which is likely to favor the greenback in recovering some of its latest losses. Further, Tuesday’s RBA minutes and Japanese Trade Balance, Wednesday’s RBNZ and Friday’s Canadian CPI are some other stats to be observed. Herein, RBA minutes may reveal praise for China’s economic improvement and could help AUD extend its upside whereas RBNZ seem to be on the sidelines by discussing weaker GDP print and can weaken the NZD. Also, Canadian CPI and present inability of Crude Bulls to propel energy prices are likely reasons for CAD to keep trading down.
Given the latest shock from Fed, coupled with fewer data-points to be observed, chances of witnessing a less volatile market are higher. However, any political news from UK, EU and/or US should be given proper attention as these can offer traders a reason to propel market moves.
[B]Technical Talk[/B]
Considering latest weakness of the USD, the EURUSD may challenge 1.0830-50 region before aiming the 200-day SMA level of 1.0900. Though, 100-day SMA figure of 1.0650 acts as short-term important support. GBPUSD also signal extended advances to 1.2580 if it breaks 1.2410 on a daily closing basis but 1.2220 shouldn’t be ignored if the pair reverses from present levels. Further, USDJPY traders should be on the lookout for 111.60-40 region with 113.50 being nearby resistance while 0.7780 & 0.7110 are likely upside levels that should be observed by AUDUSD and NZDUSD buyers respectively.
Have a nice trading-day ……