Weekly Forex Review – Week Commencing 20th March 2017
In the run-up to the French election, Macron outperforms the rest of the contenders in yesterday’s TV debate. The EUR rises, but only by 80 pips or so.
Australia the RBA minutes noted that some areas of the economy have improved and that economic growth is to accelerate gradually to above potential over the next 2 years. However, they highlighted that the rise in the currency could complicate transition (slight jawboning) and as such AUD/USD fell from 0.7730 to test the 0.77 area but this was rejected and price has consolidated just above.
UK CPI beat expectations and exceeded the BoE’s 2% mandate by printing at 2.3% vs 2.1%. CAD Core and Headline Retail Sales beat expectations (1.7% vs 1.3% and 2.2% vs 1.5% respectively).
BoJ minutes from January 30th-31st meeting stated that Japan’s economy continues its moderate recovery trend and that most members agreed that price momentum is not firm yet. The minutes stated that exports picked up led by auto-related exports and that industrial production picked up reflecting moderate increase in demand at home and abroad, while 1 member suggested the BoJ should accommodate rising yields. (Newswires)
RBNZ kept rates unchanged as unanimously expected. The central bank also commented that further depreciation of the currency is needed, but was optimistic on the domestic outlook which resulted in OIS pricing increased odds for a hike, with a February 2018 move priced at 49% vs. Prev. 45%. (Newswires)
Negotiations prior to the vote on Trump’s Obamacare replacement appear to be going reasonably well. Acceptance is seen as important to fund Trump’s tax reduction and infrastructure spending plans.
There was a terrorist attack in London with 4 people killed.
UK Retail Sales were positive (1.4% vs 0.4%).
In the US, Trump’s healthcare vote is delayed until this afternoon. Trump says if it does not pass he will leave Obamacare in place.
BoE’s Vlieghe said that inflation does not necessarily mean a rate hike.
Canadian CPI was on target or better (Headline: 0.2% vs 0.2%; Core 0.4% vs 0.1%).
There was a mini-correction on Tuesday with global equity indices falling and the USD down. Oil also dropped and was down on the week. Gold rose and was up on the week. US 10-Year Treasuries dropped over the week with some flight to safe haven. All eyes then moved to the Obamacare replacement vote, which was delayed on Thursday night and abandoned on Friday night. There was widespread consolidation in currencies: the EUR was flat and the JPY and the GBP both strengthened, but within their ranges. CAD continues to grind down and the AUD and NZD drop within their ranges.
Two trades closed last week: Trade 14 (Japan 225 long) for a loss of 0.48% and Trade 15 (WTI short) for breakeven. Month-to-date performance is a gain of 3.74% and year-to-date performance is a gain of 3.70%.
Weekly Forex Outlook – Week Commencing 27th March 2017
On Monday, the effect of the abandoned Obamacare replacement vote was manifest: a gap down and a move down in the USD index and global equity indices.
Thurs – US Final GDP
Fri – Tokyo Core CPI; UK Current Account; CAD GDP; US Core PCE Price Index
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