Weekly Review and Outlook 24th April 2017

Mark NugentApril 2017, Trading Plan

Weekly Forex Review – Week Commencing 17h April 2017

Economic Calendar

Over the weekend:

Saudi Arabia, Iraq, Kuwait Aim for USD60/bbl oil price. The three OPEC countries see price level as appropriate to lift their economies without spurring more output from American shale, signalling they will support additional production cuts next month. (WSJ) Saudi Oil Min Al Falih said “it’s too soon to discuss extending oil output pact. The level of compliance among OPEC and non-OPEC oil producers with a global deal to cut output is very good, above 100 percent, but it is premature to talk about extending the deal.” (Nasdaq)

Geopolitical tensions continued: North Korea says “we will go to war” if US chooses to provoke. US VP Pence said that the “US era of strategic patience with North Korea is over.”

Monday

Monday was a Bank Holiday in EU. US Treasury Secretary Mnuchin warned of a delay to tax reform, as he commented that the timeline to get it complete by August is “highly aggressive to not realistic at this point”. Mnuchin added that over long periods of time the strength of the USD is a good thing.

Tuesday

RBA minutes from April 4th meeting stated that conditions in the labour market had been somewhat weaker than had been expected. RBA minutes also stated that members judged steady rates consistent with growth and inflation targets, while CPI is expected to pick up above 2% this year.

UK PM May announces General Election on 8th June.

Wednesday

EUR Final CPI, both Headline and Core, met expectations at 1.5% and 0.7% respectively. NZD CPI q/q beat expectation (1.0% vs 0.8%).

Thursday

US Treasury Secretary Mnuchin stated that ‘we are close to bring forward major tax reform’. US Office of Management and Budget Director Mulvaney said the budget will include USD 200bln for infrastructure spending. Otherwise it was a very quiet financial news day.

There was a terror attack in Paris, killing a policeman.

Friday

UK Retail Sales missed significantly at -1.8% vs a forecast -0.3%. Canadian CPI m/m missed at 0.2% vs 0.4%.

Market Reaction

It was a short week with Europe having Easter Monday. Risk sentiment was negative for most of the week, picking up slightly in the second half. The USD was down on the week as was oil and gold. US equities were up. The US 10 Year Treasury yield rose across the week. The EUR rose over the week but was knocked back on Thursday after the terror attack. The GBP rose after the election announcement as UK equities fell. CAD fell as oil dropped. The AUD had a down week, recovering some of the loss in the second half, as the iron ore price went sideways.

Trading Plan

Trade 21 (Japan 225) was opened on Thursday and closed the week slightly positive but with stop at the original position.

Weekly Forex Outlook – Week Commencing 24th April 2017

Economic Calendar

Over the weekend:

The French election first round was on Sunday. Macron and Le Pen went through to the second round as per the polls, with the expectation that Macron will win in the second round. There has been a relief rally in the EUR and global equities have gapped up on Monday morning. The JPY has also gapped up (weakening) on the improved risk sentiment.

US President Trump said he will unveil a tax plan this week in which businesses and individuals will receive a “massive tax cut” under a tax reform package. Trump stated that the tax cuts will be bigger than any tax cut ever and will be released on Wednesday or shortly thereafter. (AP) However, there were separate reports that that suggested the timing of the tax plan is in dispute as his budget director, Mick Mulvaney, said it might not come until June. (WSJ)

US Congress and White House could be facing a government shutdown over administration demands to find funds for a border wall, while other reports suggest officials are unsure if President Trump will sign funding bill without money for the border wall heading into the expiry of the congressional deal to fund government at midnight on Friday. (Politico/Guardian)

Mon –

Tues –

Wed – AUD CPI; CAD Retail Sales

Thurs – JPY Policy Rate, Statement and Outlook; EUR Rate and Press Conference

Fri – JPY Tokyo Core CPI; EUR CPI Flash; USD Advanced GDP

Financial News

It’s all about the French election.

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