Last Asia session we had Trade Balance data from China which we saw both exports and imports surged largely especially the raw commodities such as iron ore, this of course became a great positive sentiment for AUD and provided some support for previous negative GDP number.
London session was relatively quiet as traders were waiting for the big event - the ECB rate and conference.
Then at NY session, the rate came out as expected, unchanged.
The conference started at 8:30am and few highlights were:
-ECB has reduced monthly purchased from EUR 80 bln to EUR60 bln; a reduction of 20 bln that will take effect on Jan 2017
-The program will be extended at least until Dec 2017
-ECB Draghi emphasized that they can change the volume back to EUR 80 bin if necessary
-Tapering is a plan and eventually will happen, but as for now, a complete removal is not on the table
-ECB will maintain a significant presence in the market even after Dec 2017
-Adjustment to APP: minimum length reduced from 2 years to 1 year to help address the issue of bond scarcity.
The measure of ECB is really a balance between hawkish and dovish, as originally market was expected the bond buying program to remain at 80 bin but extends to only March 2017 - now ECB has reduced the volume but extended the period - a compromise to be made.
USD unemployment claims came out as in line.
WTI closed high today above $50 with solid candle; equity markets once again closed green to give us another risk on sentiment day.
Later on we will have inflation data from China.
-EUR
Market has regarded today’s ECB meeting as dovish, although the volume of bond buying has reduced but the period has extended indefinitely as Draghi mentioned Dec 2017 was merely a guide line. Meanwhile, Draghi kept emphasized that ECB can revert the volume back to 80 bln if necessary. The fact is that Eurozone is still in this low inflation territory, moreover, 2 major European countries are going to have presidential election next year which will be very big political turmoil if right wing parties become the new leaders. The last thing ECB wants to do is to jeopardize the economy while the politics are not yet stable.
We’re still bearish and more confirmed about the bearish future of EUR
-GBP
As mentioned, a positive EUR is a negative GBP and vide-versa, that was what happened today. Although no major news in GBP, we did see GBP surged against EUR. However, the fundamental side of GBP still remains the same as bearish, as political unstableness and future of UK is still on the table for negotiation with Eurozone.
We’re still bearish but will only sell GBP against really strong currencies as GBP still has bullish strength in comparison with other weak currencies.
****court hearing is now over - result will be out as soon as possible****
-CAD
As mentioned, CAD is highly correlated to oil market nowadays as the economic condition and central bank policies remain to be neutral. The WTI went up today and so did CAD.
We’re bullish for CAD but always keep an eye on the oil market and only buy CAD against weaker currencies.
****5 out of 14 OPEC producers are going to meet this Saturday to talk more about the agreement they have reached last week.****
(don’t keep any CAD position over the weekend)
-NZD
NZD was once again benefited from the internal strength and external risk on appetitive. It is really one of the strongest currencies for now.
-AUD
AUD was in the same spot as NZD, and although the negative GDP data this week did shadow it with some negativity, by an large it is still a very favourable currency to buy against weaker currencies.
-JPY & CHF
Both currencies are still bearish in this risk on appetite market. Watch out for any global big event to avoid safe heaven inflows.
-USD
USD continues to be our rising star - especially now since the fate for bearish EUR & GBP has pretty much set. However, the uncertainty of the currency is still there as the FED meeting is next Wed, but after the meeting and regardless of the result, we will have a clear view and continuation of buying into USD. As for now, buy it at dip but be careful for any sentiment changes.
We’re still looking to buy USD, NZD, CAD & AUD (for CAD & AUD only for intraday)
Wr’re still looking to sell JPY, CHF, EUR & GBP (for GBP, only sell against the above currency)
LONG
USD/JPY
USD/CHF
NZD/JPY
NZD/CHF
CAD/JPY
CAD/CHF
AUD/JPY
AUD/CHF
SHORT
EUR/USD
GBP/USD
EUR/NZD
GBP/NZD
EUR/CAD
GBP/CAD
EUR/AUD
GBP/AUD
Last Asia session we had Trade Balance data from China which we saw both exports and imports surged largely especially the raw commodities such as iron ore, this of course became a great positive sentiment for AUD and provided some support for previous negative GDP number.
London session was relatively quiet as traders were waiting for the big event - the ECB rate and conference.
Then at NY session, the rate came out as expected, unchanged.
The conference started at 8:30am and few highlights were:
-ECB has reduced monthly purchased from EUR 80 bln to EUR60 bln; a reduction of 20 bln that will take effect on Jan 2017
-The program will be extended at least until Dec 2017
-ECB Draghi emphasized that they can change the volume back to EUR 80 bin if necessary
-Tapering is a plan and eventually will happen, but as for now, a complete removal is not on the table
-ECB will maintain a significant presence in the market even after Dec 2017
-Adjustment to APP: minimum length reduced from 2 years to 1 year to help address the issue of bond scarcity.
The measure of ECB is really a balance between hawkish and dovish, as originally market was expected the bond buying program to remain at 80 bin but extends to only March 2017 - now ECB has reduced the volume but extended the period - a compromise to be made.
USD unemployment claims came out as in line.
WTI closed high today above $50 with solid candle; equity markets once again closed green to give us another risk on sentiment day.
Later on we will have inflation data from China.
-EUR
Market has regarded today’s ECB meeting as dovish, although the volume of bond buying has reduced but the period has extended indefinitely as Draghi mentioned Dec 2017 was merely a guide line. Meanwhile, Draghi kept emphasized that ECB can revert the volume back to 80 bln if necessary. The fact is that Eurozone is still in this low inflation territory, moreover, 2 major European countries are going to have presidential election next year which will be very big political turmoil if right wing parties become the new leaders. The last thing ECB wants to do is to jeopardize the economy while the politics are not yet stable.
We’re still bearish and more confirmed about the bearish future of EUR
-GBP
As mentioned, a positive EUR is a negative GBP and vide-versa, that was what happened today. Although no major news in GBP, we did see GBP surged against EUR. However, the fundamental side of GBP still remains the same as bearish, as political unstableness and future of UK is still on the table for negotiation with Eurozone.
We’re still bearish but will only sell GBP against really strong currencies as GBP still has bullish strength in comparison with other weak currencies.
****court hearing is now over - result will be out as soon as possible****
-CAD
As mentioned, CAD is highly correlated to oil market nowadays as the economic condition and central bank policies remain to be neutral. The WTI went up today and so did CAD.
We’re bullish for CAD but always keep an eye on the oil market and only buy CAD against weaker currencies.
****5 out of 14 OPEC producers are going to meet this Saturday to talk more about the agreement they have reached last week.****
(don’t keep any CAD position over the weekend)
-NZD
NZD was once again benefited from the internal strength and external risk on appetitive. It is really one of the strongest currencies for now.
-AUD
AUD was in the same spot as NZD, and although the negative GDP data this week did shadow it with some negativity, by an large it is still a very favourable currency to buy against weaker currencies.
-JPY & CHF
Both currencies are still bearish in this risk on appetite market. Watch out for any global big event to avoid safe heaven inflows.
-USD
USD continues to be our rising star - especially now since the fate for bearish EUR & GBP has pretty much set. However, the uncertainty of the currency is still there as the FED meeting is next Wed, but after the meeting and regardless of the result, we will have a clear view and continuation of buying into USD. As for now, buy it at dip but be careful for any sentiment changes.
We’re still looking to buy USD, NZD, CAD & AUD (for CAD & AUD only for intraday)
Wr’re still looking to sell JPY, CHF, EUR & GBP (for GBP, only sell against the above currency)
LONG
USD/JPY
USD/CHF
NZD/JPY
NZD/CHF
CAD/JPY
CAD/CHF
AUD/JPY
AUD/CHF
SHORT
EUR/USD
GBP/USD
EUR/NZD
GBP/NZD
EUR/CAD
GBP/CAD
EUR/AUD
GBP/AUD