Daily Fundamental Dose: 16 – January – 2017
Notwithstanding few better than forecast economics, the US Dollar extended its south-ward trajectory during last week as would be US President, Donald Trump, refrained from discussing fiscal stimulus and rather talked about Mexico wall during his first press conference after being elected. Global market players remained disappointed and kept running towards safe-havens in search of safety while commodity currencies had their own benefits due Chinese figures. Let’s analyze upcoming market-moves and flash light on the past week as well.
Trump Disappointment Ruled Last Week
Even with shorter economic-line, which eventually gifted positive Jobless and Retail Sales figures, the greenback couldn’t confront Bears released through earlier FOMC minutes as Mr. Trump couldn’t please traders with any fiscal & tax details, which were eagerly awaited, and rather kept focusing on divisive plans. As a result, the US Dollar Index (I.USDX) declined for third consecutive week while safe-havens, namely JPY and Gold, kept being favorite and surged. Further, the EUR and GBP had their own issues with upcoming Brexit negotiations in March which dragged the Pound further towards south while upbeat second-tier releases from EU helped EUR to remain strong. Looking at commodity currencies, namely AUD, NZD and CAD, Chinese inflation figures and weaker USD favored their upside while speculations relating to less impact of global production cut and higher US inventory marked another negative week for Crude.
What’s There In Upcoming Week?
Alike last week, political issues at EU, UK and US are likely to dominate this week whereas mainstream economics concerning Inflation and Job numbers could also provide active trading-days to prevail.
At the start of the market-trading, GBP witnessed a plunge as Sunday Times reported during weekend that UK PM would prefer more of strong borders and laws after Brexit than to maintain its entry-gate status during her press conference on Tuesday. The same uncertainty provided additional strength to the JPY and Gold while US Holidays on Monday curned greenback moves. Further, the Crude prices witness a bit short-covering on weaker USD which in-turn could be witnessed in AUD, NZD and CAD prices.
Looking forward, Monday’s speech by BoE Governor and Tuesday’s UK PM’s conference will be crucial for GBP traders in addition to Tuesday’s UK CPI, Wednesday’s Job numbers and Friday’s Retail Sales. While economic figures at UK are indicating mixed signals, a dovish stance of BoE Governor and strong comments favoring border laws by UK PM might continue dragging the GBP to down.
The US economic calendar is also active with Tuesday’s Empire State Manufacturing, Wednesday’s CPI and Thursday’s housing and Philly Fed Manufacturing Index. Most of the data-points are likely to depict strong US economy but Yellen’s public appearances during Wednesday and Thursday, followed by start of Trump administration on Friday, would provide important clues to determine near-term USD moves.
For EUR traders, Thursday’s ECB meeting will be crucial while Aussie players shouldn’t miss AU employment details, up on the same day. Additionally, BoC meeting, Chinese GDP and Industrial Production and the Canadian CPI & Retail Sales are some other details to observe for traders’ fraternity.
Given the present uncertainty surrounding EU-UK relationship and Trump administration’s impact on US, safe-havens are more likely to maintain their upside while GBP and USD may still have to go through hardships if scheduled data-points also disappoint markets.
With EURUSD’s sustained break of two-month old descending trend-line, coupled with pessimism at US, chances of the pair’s further upside towards 1.0850 become more likely while 1.0500 keep being strong support to watch. The GBPUSD dropped below 1.2100 and is expected to revisit 1.1800 mark while AUDUSD’s failure to surpass 100-day & 200-day SMA confluence might trigger its pullback if AU job figures remain dismal. Furthermore, USDJPY seems targeting 112.80 & 111.30 strong supports with 115.50 considered as important resistance whereas 0.7150 & 0.7030 continue being important levels for NZDUSD traders.
Have a nice trading-day ………..