[B]Daily Fundamental Dose: 18 – May – 2017[/B]
Hello Traders,
If there is one thing that’s worth mentioning during this few-events-carrying week than it has to be the political saga of US. It all started few weeks back when US President fired an FBI Chief who was investigating possible linkages between Trump’s 2016 presidential campaign and Russia without providing any strong reasons. However, he, Mr. President, never knew that things could become worst for him as counterattacks from the fired Chief revealed that he was once asked to conclude the investigation of former National Security Advisor, Michael Flynn, who seemed to be a culprit in 2016 election campaign. As a result, the US Dollar dropped heavily towards testing lowest levels since November on concerns that Trump administration’s one after the other problems may hinder the path of US pro-growth policies which were promised by Mr. Trump.
[B]Greenback’s Dip & Safe-Havens Rise[/B]
While political uncertainty over the US raised bars for any strong economic measures to be taken by the US policymakers soon, data-points were also not in favor of the greenback and pushed investors to either liquidate their USD longs or adhere to short-selling.
On the other hand, EUR rallied noticeably after Angela Merkel’s party won regional election and EU details remained upbeat while GBP struggled to maintain its advances even after strong inflation and job numbers. Further, commodity basket was a clear gainer as weak USD and optimistic investment plans from China favored their demand whereas Crude prices rallied as global oil producers seem almost certain to announce extended output cut and US stockpile declined for six consecutive week. Additionally, JPY and Gold, the famous safe-havens, rallied noticeably as present uncertainty over the future of Trump administration pushed traders towards risk-safety.
Hence, market players were all disappointed to see USD going down and the Wall Street has also started responding to the threats over US policymakers. Though, EUR, Gold and JPY are taking advantage of the same.
[B]Few Economics To Track Before The Weekend[/B]
Adding to already prevailing US pessimism, the FBI appointed special counsel to investigate the matter over Trump campaign allegations which in-turn provided noticeable weakness to the greenback as a proven link between Trump and Russia may lead to Mr. President’s impeachment.
On early-Thursday, releases of positive Australian jobs report and Japanese GDP favored AUD and JPY to extend their up-moves whereas Crude prices witnessed a bit of pullback together with EUR & GBP.
Moving on, UK Retail Sales, US Jobless Claims and Philly Fed Manufacturing Index are some stats that can make traders busy during the rest of the day whereas Canadian CPI & Retail Sales may entertain market players on Friday.
While UK Retail Sales is expected to reverse its prior contraction and may help GBP to gain, chances of US details to help the greenback are too less. Further, Canadian data-points are also likely to favor CAD in stretching its latest up-moves.
With the political turmoil over US economy questioning Trump administration’s efficiency, together with chances of Donald Trump’s impeachment in worst case, USD is likely to suffer for longer. However, a boost from Fed is much needed, and may become effective, at this point of time as the greenback has already lost heavy size of its gains.
On the contrary, upbeat sentiment at EU can help the EUR while JPY & Gold may keep being traders favorite in present such time. Further, GBP still struggles to justify its economic strength and any negative may have higher repercussions.
[B]Technical Talk[/B]
EURUSD’s successful trading above 1.1000 mark indicates its rally towards 1.1200 with a dip below 1.10000 mark reigniting importance of 200-day SMA figure of 1.0825. Further, GBPUSD repeatedly fails to surpass 1.3000 mark with 1.2850 being nearby support whereas USDJPY seems declining towards 110.00 but a break above 100-day SMA level of 112.80 can flash 114.30 on the chart. Additionally, AUDUSD and NZDUSD are aiming 0.7500 & 0.7000 respectively while 0.7370 & 0.6850 may act as adjacent supports.
Have a nice trading-day ……