Daily Alert: For Wednesday 2nd March 2016

Mark Nugent 2016 H1, Daily Alert, March 2016

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Fundamentals and Sentiment – New Information (Economic Calendar)

Monday’s risk-off sentiment has been replaced by risk –on sentiment today.

Monday

European Core CPI Flash Estimate misses at 0.7% vs expectation of 0.9%.

Tuesday

Australian cash rate unchanged as expected. “At today’s meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate. Over the period ahead, new information should allow the Board to judge whether the improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.”

UK Manufacturing PMI came in at 50.8 vs expectation of 52.3. 50 is the turning point – above 50 means there is expectation of economic growth; below 50 sees expectation of contraction.

Canadian monthly GDP beat expectations: 0.2% vs 0.1%.

New Zealand Global Dairy Trade reported its first positive return in 5 prints with growth of 1.4%.

In the US the critical ISM Manufacturing PMI came in at 49.5 vs expectation of 48.5 which is good, but still less than 50.

Fundamentals and Sentiment – Market Reaction

The Vix is flat on the day at around 20.55. WTI rose yesterday to the top of the consolidation zone and dropped slightly today. Brent rose above the consolidation zone yesterday and closed above it. A small drop today sees pricing at the top of the zone. All stock markets are up. Bond yields are up in Europe and the US (prices down, indicative of risk-on). The JPY index shows weakness today after strengthening during yesterday’s more risk-off sentiment. All three commodity currencies are up.

Fundamentals and Sentiment – Financial Media

Dominated by Super Tuesday in the US.

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Trades
  1. Euro Weakness

My EURUSD trade continues down and into a profit of 284 pips. I will look for sideways consolidation on the H4 chart to place a second trade.

EURAUD is exiting its channel on both the D1 and H4 charts. A close outside at 10pm GMT is a sell entry setup. You will have to check that the AUD is strong and we are risk-on for this trade and all AUD trades.

  1. GBP Weakness

GBPUSD shows consolidation on the H4 chart. A close below the lower trendline would be a sell entry setup.

GBPAUD has exited the channel and is pulling back to the trendline. A move down is a valid sell entry setup.

  1. JPY Weakness

USDJPY – a nice move up today. I will enter at the short-term resistance around 114.00. The H4 chart is revealing: price action is within a triangle, but the entry price for a long remains 114.00.

  1. NZD Weakness

No setups present themselves at this time.

Tomorrow

Australian GDP and USD ADP Non-Farm Payroll are the highlights.

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