Weekly Review and Outlook 6th March 2017

Mark NugentMarch 2017, Trading Plan

Weekly Forex Review – Week Commencing 27th February 2017

Economic Calendar

Monday: no news.

Tuesday: US Prelim GDP q/q missed (1.9% vs 2.1%).

Wednesday:From ZeroHedge –

Tuesday US President Trump’s Joint Congress Address:
– US President Trump delivered a speech to Congress in which he stated he is to ask Congress for a USD 1tln infrastructure investment, which will be financed by both public and private capital.
– Trump stated they are working on historic tax reform so the US can compete and will reduce tax rate on US companies, adding that “it will take a big, big cut”.
– Trump commented that he will repeal and replace Obamacare and that he is to bring down the high price of drugs.
– Trump stated that they will soon begin construction of ‘Great wall’ on the southern border.

Note: US equity futures pared some gains during Trump’s speech although the price moves were relatively mild, while USD was pressured amid slight disappointment as the Congress address failed to provide any significant surprises or in-depth details. However, price moves were not sustained and on conclusion of the speech, USD resumed its strengthening trend.

AUD GDP q/q exceeded expectations (1.1% vs 0.7%).

BOC kept Overnight Rate unchanged at 0.50%. The BOC continue to look through the inflation data, citing the core rates pointing to material excess capacity in the economy. Job gains and subdued wage growth reflect ‘persistent’ economic slack, so everything points to rates on hold for longer.

RBNZ Governor Wheeler stated that risks around future rate movements as equally balanced and added the RBNZ is comfortable with current economic projections. (Newswires)

The Fed’s preferred measure of inflation, Core PCE Price Index m/m was as per expectation at 0.3%.

UK PM Theresa May loses vote in Lords with adoption of amendment to safeguard EU nationals.

Thursday: Tokyo Core CPI y/y missed at -0.3% vs 0.2%. CAD GDP m/m was on target at 0.3%.

Friday: UK Services PMI missed at 53.3 vs 54.2.

Fed Chair Yellen was somewhat less hawkish than anticipated as she stated that a rate increase in the next meeting will likely be appropriate if the Fed determines inflation and employment data remain in line with expectations, while she also commented that US growth potential looks a little lower than 2%.

Fed’s Bullard (Non-Voter, Dove) stated that economic conditions have not changed since January to justify a March increase and that the March statement could be used to set up May. (Newswires)

Market Reaction

The USD was flat on the week due to Friday’s drop after Yellen’s dovish comments. Gloabl equity indices were up on the week but the intra-week pattern was very much up then down, or risk-on then risk-off. The EUR was the best p[erforming currency across the week, moving back to the centre of its consolidation zone. The JPY weakened across the week although there was a slight strengthening at the end of the week as the tone moved more risk-off. The GBP was down after Article 50 problems. The CAD hits support on the way down. The NZD exits a channel it has been in since mid 2016.

Trading Plan

Trades closed this week are: Trade 12 (Euro50 short) at breakeven; Trade 3 (Japan 225 long) for a gain of +1.20%; Trade 7 (S&P500 long) for a gain of 2.58% and Trade 10 (EURUSD short) for a gain of 1.00%. Monthly performance is +4.78% and YTD is +4.74%

Weekly Forex Outlook – Week Commencing 6th March

Economic Calendar

Early today we have had AUD Retail Sales on target at 0.4%.

Mon – see above
Tues – AUD Cash Rate and Statement
Wed – UK Annual Budget Release
Thurs – China CPI, EUR Minimum Bid Rate and Press Conference
Fri – US Average Hourly Earnings and Non-Farm Employment Change

Financial News

Dax is closing in on record high

Dutch election wide open

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