Weekly Forex Review – Week Commencing 9th October 2017
We have seen a very quiet start to the week with the US, Japan and Canada on holiday.
Early Tuesday morning, the Australian NAB Business Confidence index shows an increase in confidence.
Catalonia pulls back from the brink and delays declaring independence. The EUR rises.
Yesterday saw the Minutes of the last Fed meeting. Key points:
- One more rate increase this year is likely.
- Further increases in 2018 are data dependent, and there is concern at persistent low inflation.
- GDP will be lowered by hurricanes but will rebound by year end.
Spanish PM Rajoy gave the Catalan leader 5 days to clarify their position regarding independence.
Brexit negotiations are at a virtual political standstill, with no notable advances made in the fifth round of negotiations, according to several diplomats briefed on the discussions.
ECB is reported to be considering reducing QE to EUR30b/month from January and extending it until at least September 2018.
Chinese Trade data was mixed with exports below and imports above expectation. The AUD reacted positively to the import number, as they export to China.
US CPI missed (both Headline and Core). US Retail Sales was more mixed, with Core beating and Headline missing expectation.
Risk tone over the week was neutral/on. Equities rose or were flat. The USD rose as did Gold. The US 10 Year yield dropped and the JPY was flat. So a mixed bag, hence neutral/on.
My themes for the week were:
1. GBP sentiment – currently negative – looking to trade GBP strength.
The GBP was up over the week but with no real momentum. On Wednesday it dropped significantly intra-day before ending up at the close. Difficult to trade GBP strength.
2. Looking for equity pullbacks to go long– may have to wait.
3. Gold – are we seeing a pullback? Looking for a short.
We are seeing a pullback. Five straight days of gains. So we keep waiting for an opportunity to go short.
4. USD – will NFP impact last? Looking to trade USD strength.
It didn’t as it was attributed to hurricanes rather than the economy. However the USD dropped on the week.
Weekly Forex Outlook – Week Commencing 16th October 2017
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