Weekly Forex Review – Week Commencing 3rd April 2017
AUD Retail Sales miss by a fair bit (-0.1% vs 0.3%).
AUD Cash Rate remains unchanged at 1.50% as expected. The Central Bank commented that the unchanged policy is in line with growth and inflation targets. RBA also stated that the pick-up in inflation is expected to be gradual and that China faces medium term economic risks.
S&P lowered the South African sovereign credit rating to BB+ from BBB, while Moody’s placed South Africa Baa2 rating on downgrade review.
UK Services PMI beats expectation (55.0 vs 53.5).
In the US, ADP Non-Farm beat expectations at 263K vs 184K.
The FOMC minutes showed that a change to the Fed’s reinvestment policy would likely be appropriate at the end of 2017 but that it would depend on the evolution of the economy.
On interest rates, the minutes said that officials were split on whether higher inflation warranted faster hikes now or a more gradual pace.
The minutes also showed that some saw current stock prices as “quite high”.
The ECB’s president Draghi has communicated to the market in no uncertain terms that the current policy stance is not yet ready to be altered. The rates market was getting ahead of itself once again, and this was seen to be a threat to the fledgling recovery, with inflation already stalling.
The US conduct a missile strike on Syria after the latter’s chemical attack on civilians.
US Average Hourly Earnings came in on expectation at 0.2%. Non-Farm Employment Change missed drastically at 98K vs expectation of 174K.
The USD rises on Friday to finish the week up as most equity markets are flat with the notable exception of the FTSE250 which closes at an all-time high. Oil continues to rise, propelled on Friday by the US strike on Syria. Gold rises as well on Friday but gives most of the rise back before the close. The US 10 Year Treasury yield drops significantly during Friday tarding but again rises to close only slightly down and above the short-term support. On the currency markets, the EUR is driven down my Draghi’s re-iteration that things are not as good as indicated at the March ECB meeting. The JPY strengthens at the start of the week but Thursday and Friday, although volatile, do not continue the trend. CAD rises with oil. AUD touches support and NZD continues to consolidate.
Trade 16 (S&P500 long) closes for a gain of +0.52%. Monthly performance is +0.52% and YTD is 4.87%.
Weekly Forex Outlook – Week Commencing 10th April 2017
Over the weekend: Fed’s Dudley (Voter, Dove) said the Fed are still working on a plan to shrink the balance sheet and expects to begin to shrink the balance sheet later in 2017, early 2018. (Newswires)
A US carrier group heads towards the Korean peninsula. There is much anti-Anerican comment from Syria and its allies.
Tues – UK CPI
Wed – UK Average Earnings Index; Canadian Rate Statement
Fri – US CPI and Retail Sales (Easter Holiday
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