Daily Alert: Thursday 16th March 2017

Mark NugentDaily Alert, March 2017

Forex Analysis for Thursday 16th March 2017

Wednesday:

UK Average Earnings missed (2.2% vs 2.4%). US Core CPI was on target at 0.2% with headline CPI beating expectation (0.1% vs 0.0%). US Core Retail Sales beat expectation at 0.2% vs 0.1% and headline Retail Sales missed at 0.1% vs 0.2%.

NZ GDP missed at 0.4% vs 0.7%.

The Fed’s FOMC meeting:

The Fed hiked rates by 25bps to 0.75%-1.00% as expected. However, the dot plot projections showed forecasts for 2017 and 2018 were unchanged from December at 1.4% and 2.1% respectively, while the longer run forecast was also unchanged at 3%. This was viewed as being more dovish than expectation. Fed Chair Yellen stated that the economic outlook is highly uncertain and that changes in fiscal policy can affect the economic outlook.

Thursday:

In Japan, the BoJ kept monetary policy unchanged as expected with NIRP held at -0.10%. BoJ maintained 10yr JGB yield target at around 0% and kept pledge to buy JGBs around current pace so that holdings rise JPY 80tln annually. BoJ also maintained its assessment that economy continues to recover moderately as a trend.

Dutch election – after having counted 93.5% of votes in the Netherlands election, PM Rutte’s VVD party is to win 33 seats, PVV at 20 seats, while CDA and D66 parties are to win 19 seats each. (Newswires) Subsequently, this shows a strong win for PM Rutteā€™s VVD party while the far-right, pro-Nexit PVV failed to meet projections. However, the PvdA (Labour Party and potential VVD coalition partner) underperformed with seats falling from 38 in 2012 to around 9 this time around.

The USD drops as the Fed is seen as being more dovish than expected. This benefits equities and all US indices rose, dragging most global equity indices with them. The decent in the EUR was halted by the Dutch election result where it is viewed than the rise of populism has been averted.

Stocks rally after Fed

Today we have Super Thursday from the Bank of England.

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