[B]Daily Fundamental Dose: 12 – April – 2017[/B]
Hello Traders,
While Geo-political tension between US, Syria and North Korea was already propelling safe-havens since last-week, Tuesday provide another push to investors’ flight-to-safety after North Korea retaliated to US Navy’s aggression towards Korean peninsula. The Asian nation warned US of using nuclear power on any sign of action by the US warships that were recently sent by Trump administration as a symbol of caution. As a reaction, US President, Donald Trump, tweeted that North-Korea wants trouble and the nation would solve the problem with or without China. With this, safe-havens like JPY and Gold rallied considerably while the US Dollar had to bear the burden of its tough political stance. Moreover, the trump administration assured top US companies’ executives to get rid of Dodd-Frank rule soon in addition to signaling some government agencies to be prepared for cost-cutting.
As greenback was suffering from its latest geo-political problems, the EUR also dropped after recent polls showed a far-left veteran suddenly gaining popularity among France and gained to be among top-four contestants of French election. Further, the GBP couldn’t celebrate upbeat CPI figure while AUD, NZD and CAD remained strong enough due to commodity basket gains. Moreover, Crude prices stretched its longest winning streak since December after Saudi Arabia signaled to join production-cut extension and API flashed depletion in stockpiles ahead of official US inventory release today.
On early Wednesday, traders kept pilling on their risk-safety longs while trimming the greenback burden. The economic calendar also flashed soft factory gate inflation from China and a bit higher than forecast but weaker than prior CPI. Additionally, German WPI also dropped to 0.0% from 0.5% prior and provided further weakness to the Euro. Furthermore, AUD and NZD witnessed pullback on weaker Chinese release while CAD continued its north-run on strong Crude prices.
For the rest of the day, speeches from BoE Governor and US President, together with UK jobs figures and BoC meeting, would be closely observed. While BoC isn’t expected to alter its present monetary policy and the BoE Governor may sound hawkish, weaker employment numbers from Britain and another dominant speech by US President can hurt GBP and USD respectively. Moreover, Crude inventories might also become crucial for energy traders as the release is likely to reveal US stockpile depletion, which in-turn can help Oil prices and CAD.
Hence, while geo-political tension would continue to dominate market moves, the economic-calendar also has some important releases and may help widen volatility. It would be in the best interest of investors to be cautious before buying the greenback and EUR amid present uncertainty but having JPY, Gold, Crude and CAD in their kitty might not create any big problems.
[B]Technical Talk[/B]
With the GBPUSD’s latest break of short-term descending trend-line, the pair might aim for 1.2550 with 1.2460 being nearby support while USDJPY seems witnessing a pullback from 109.30 horizontal-support and can revisit 110.00 but a break of 109.30 can quickly fetch it to 200-day SMA figure of 108.60. Further, CADJPY also failed to extend its south-run below 81.95 – 82.15 support-zone and is heading towards 82.55.
Have a nice trading-day ……