Daily Fundamental Dose: 14 – March – 2017
Even if US NFP and Unemployment-rate cemented chances of a Fed rate-hike during this week’s FOMC meet, hawkish ECB and a bit weaker than expected wage growth figure, coupled with Donald Trump’s travel ban news, pushed traders towards trimming some of their latest USD-longs. With this, the US Dollar Index (I.USDX) stopped its four-week upward trajectory with a first negative weekly closing. However, the same bias couldn’t manage to sustain during early-days of the present week as traders have again tightened their belt in anticipation of a rate-hike and hawkish statements from the Fed.
Hence, FOMC is for sure to dominate this week’s market moves. Though, there are some other central-bankers, like BoJ, SNB and BoE, which may provide intermediate trade opportunities. Additionally, UK and Australian job numbers, US CPI and New-Zealand GDP, may keep offering busy trading sessions to market players. Let’s analyze them in detail.
Traders Booked Profits Even With Rate-Hike Chances
During early last-week, the US Dollar managed to extend its previous north-run but Trump’s extended travel-ban announcement and hawkish statements from ECB President, followed by a bit softer US Earning figure, triggered the greenback’s profit-booking. Some might also argue that traders have been cautious about Fed’s rate-hike but nothing seems to be true as the USD headed to another up-move during present-week.
The EUR managed to gain with ECB optimism and favorable condition at French political front but the GBP kept running down. Further, the AUD, NZD and CAD extended their south-run as commodity basket was largly hit with weaker Chinese data-points and a plunge in Crude prices due to record high US stockpile figures. Further, the JPY and Gold couldn’t register any rise as market-players chose to run towards risky-assets in search of higher-returns.
Central Bankers Will Be In Command With FOMC Being Leader
Moving forward, rate-hike speculations regained acceptance and are governing present week’s market momentum. Monday was almost a quite-day with no major economics up for publishing but the EUR had to liquidate some of its latest gains as few ECB Governing Council members turned down market optimism relating to higher EU Inflation while GBP continued trading to south even as UK PM got houses’ approval for triggering Article 50 discussion with EU. Furthermore, the Crude prices dropped as latest news suggested five-month high production by U.S. shale and the same weakened AUD, NZD and CAD prices.
While economic calendar have already started being active from today onward, with higher Chinese Industrial Production and EU & German ZEW figures and US PPI being in pipeline, traders are more likely to be active from tomorrow onward when UK Jobs report, US CPI, the FOMC and New-Zealand GDP could trigger noticeable market moves. Forecasts suggest, weaker economics hurting GBP with US & New-Zealand data-points are also likely to flash soft marks but FOMC rate-hike could keep propelling USD towards north.
On Thursday, AU Jobs report and monetary policy meetings by the BoJ, SNB and BoE could dominate trade sentiment. Among them, AU employment numbers can help AUD to witness mild profit-booking while expected inactivity at central bankers may force investors to analyze details before judging respective currencies.
The present week ends with Canadian Manufacturing Sales and US Prelim UoM Consumer Sentiment figures on Friday. While Canadian number may not help the CAD to recover its losses unless global oil supply-glut signals weaken, the USD can stretch its north-run a bit up on improved consumer sentiment.
Hence, with FOMC being on the card to announce its second rate-hike in nearly three-months’ time, traders are more likely to look for clues relating to whether the Fed is on its plan to provide three such moves in 2017. If the US central banker goes beyond the limit and terms latest improvement in US economy requiring more than previously planned hikes, chances of greenback’s rally can’t be denied. However, any disappointments may have higher repercussions and hence need to be traded cautiously.
With the rate-hike concerns likely providing across the board USD strength, the EURUSD could extend it’s another pullback from 100-day SMA towards 1.0500 – 1.0490 region but 1.0700 may act as nearby important resistance. GBPUSD signals 1.2120 and 1.2080 re-tests with 1.2310 being short-term crucial upside figure while USDJPY seems already in the run to target 116.00 with 113.70 support to be observed for the week. Further, AUDUSD and NZDUSD are near to their 0.7520-10 and 0.6880-70 respective support-zones with 0.7630 & 0.7030 being upside figures to watch.
Have a nice trading-day ……