Daily Fundamental Dose: 22 – June – 2017
Hello Traders,
While lack of economics has been trying to curb financial-market moves since early weekdays, plunge in Crude prices, coupled with UK & US policymakers’ comments, let the traders enjoy volatility. Moreover, RBNZ’s latest monetary policy meeting registered noticeable flip in NZD but the kiwi failed to counter big draw-down from commodity basket. Moving on, with majority of scheduled economics already being out, investors would observe the upcoming consumer-centric figures from Canada and EU’s Flash PMI numbers in order to determine near-term trade sentiment while political news can keep entertaining them. Let’s quickly analyze them.
Economics Laid Low But Politics Played Its Role
Even with no big economics were published during the week till now, hawkish comments from some of the FOMC members and opposite tone of BoE’s Chief Economist to that of the Governor offered active sessions to USD and GBP traders respectively. However, the US Dollar Index (I.USDX) has been strong but the Pound couldn’t sustain its last week’s gains. Further, the EUR failed to please volatility traders but commodity basket was in heavy losses after Crude prices entered Bear market on supply-glut concerns. Additionally, JPY and Gold benefited a bit from declining energy prices pushing risk-averse investors to safe-havens whereas AUD, NZD and CAD dropped due to the same reason.
Anticipated Catalysts For Rest Of The Week
During early Thursday, concerns that weak energy prices might not favor Fed’s anticipation about inflation and could also hurt the central bank’s rate-hike plan dragged the US Dollar towards south. Though, news from US Homeland Security Department indicating least damage done by Russian hackers during 2016 Presidential election helped the greenback. The Euro, on the contrary, benefitted from speculation that British policymakers may now adhere to soft Brexit whereas GBP remained subdued. In all these, JPY and Gold were the clear winners while commodity currencies had to bear the burden the of Crude’s downturn.
Looking at the rest of the week details, Canadian Retail Sales and US Jobless Claims might offer active sessions for USD & CAD traders on late-Thursday while Friday’s Flash PMIs from EU & Germany, followed by Canada’s CPI and US New Home Sales, could close the week.
Following a higher than forecast Canadian Wholesale Sales, traders would closely examine numbers from Retail Sales and CPI to analyze whether the economy is actually as strong as revealed by the BoC member during last week or not. The Retail Sales might register weak growth of 0.3% from 0.7% earlier and the CPI could also flash soft figure of 0.3% mark against 0.4% prior. Hence, while declining Crude prices showing a downward direction to the Canadian Dollar (CAD), weak economics may add the fuel to its south-run. However, numbers like earlier announcement of Wholesale Sales can help the Loonie recover some of its latest losses.
At EU, Flash reading of Manufacturing & Services PMIs from Germany and EU could wake up the EUR traders. Forecasts suggest, German Manufacturing and Services PMIs would release 59.1 and 55.4 numbers compared to 59.5 and 55.4 respectively while EU Flash Manufacturing PMI might remain near to its 57.00 earlier with 56.9 & Flash Services PMI could also follow the same style with 56.3 mark versus 56.4 previous. With little expected change in EU economics, chances of EUR’s muted response to scheduled data-points and reliance on UK & US news to determine moves are high.
Other than the economics, latest news from US, favoring Trump administration on alleged relation with Russia during 2016 Presidential election, and any updates from North Korea could guide the USD moves. Moreover, British PM is still struggling to form the parliamentary majority with required 10 seats and there prevails no clear sign from BoE to direct GBP’s near-term trend which in-turn could hurt the Pound. Additionally, commodity currencies might witness a pullback after declining during earlier days whereas short covering in Crude could add strength into those quotes.
Technical Analysis
EURUSD’s immediate up-moves are likely confined by short-term descending trend-line, at 1.1200 now, that signals the pair’s extended declines to 1.1080-75 support but the GBPUSD bounced-off from 100-day SMA level of 1.2630 and may aim 1.2750; though, a dip below 1.2630 can flash 1.2555 support-level, comprising 200-day SMA, on the chart. Moving on, USDJPY again indicates 200-day SMA re-test, at 110.75, with 100-day SMA level of 111.85 limiting its immediate advances but the USDCAD may clear the 200-day SMA resistance of 1.3340 and can run towards 1.3430 north-side number with 1.3180 being near-term strong support. Additionally, AUDUSD and NZDSD are both expected to remain weak with 0.7515 and 0.7120 acting as immediate supports and 0.7610 and the 0.7300 are likely respective resistances to watch.
Have a nice trading-day ……