Today we saw UK Manufacturing production m/m came out as positive deviation, not only that, all the following datas from Trade Balance, Industrial output month to month and year to year were all positive deviations.
This was a very strong indicator to show the resilient fundamental strength of UK regardless of the post Brexit.
In NY session we also saw positive deviation from Employment datas from Canada, the employment change although was lower than last time but a huge upbeat than the expected number.
The Unemployment rate also dropped 0.1% while the Participation rate actually raise up 0.1%.
This strong labour indicator plus last week’s positive GDP data have injected a whole new strength into CAD.
Today we also had IEA report for the oil market outlook, the demand has increased and OPEC members had also met 90% and more of their target curb volume, which was more than previous 80%.
This positive sentiment has caused oil market to finish the day with another green candle to give us 3rd consecutive days of uptrend.
Equity markets were largely green as well to give us a strong risk on sentiment.
The biggest news today was the meeting between Donald Trump and Japan PM Abe. They held a joint conference this afternoon and are going to spend the weekend together discuss more issues.
As expected, there weren’t too much insight for this meeting for now, but the general tone between Japan and U.S has been very friendly, and today was no exception.
For EUR
without any major updates, EUR still has the same outlook with fundamental bearish from the ECB easing to sentimental bearish from Dutch, France and German elections and the Greek Debt negotiations.
For GBP
the fundamental datas today from UK have once again showed the market how much strength UK have regardless of Post Brexit. This has been a very concurrent and consistent picture and we can really certain that the economic side of UK is very strong, at least for now.
The biggest bearish element is of course the future negotiation for Brexit and the triggering of Article 50 which is about to come in less than a month.
For USD
the court ruling yesterday to halt the Travel Ban, the phone call with Chinese Xi and the meeting with Abe plus the tax plan announcement in 2 weeks time; all these events have provided a fresh new bullish sentiment for USD. Donald Trump has soften his stance and market has calmed down to know that he is after all a business man.
Moreover, the defeat in the federal court also showed the strength of the constitutional system in U.S.
Meanwhile, the fundamental datas from U.S have continued to provide a solid picture.
The risk is still the uncertainty of policies, comments and executive orders from Donald Trump.
But as mentioned, as soon as crowds start to get used to his pattern, the sentiment will eventually die down and things will revert back to the U.S fundamentals - which is still looking very positive for now.
For AUD
Commodity currencies had enjoyed a great ride today, with AUD taking the lead and NZD & CAD came after.
The risk on sentiment has benefited all the commodity currencies, from yesterday’s positive Chinese Trade Balance, to today’s IEA report on oil demand and OPEC fulfillment.
For NZD
NZD has recovered and found its ground from the large drop of RBNZ jawboning. As mentioned, the fundamental side of NZD is still very solid and once the short-term negative sentiment passes, NZD should revert back to its fundamental strength.
For CAD
CAD has become one of our favourite currency, with the internal strength that are reflected by its fundamental datas, to the external Macro strength of the oil market, the only risk is still the renegotiation of NAFTA deal which we think will not be a disaster judging by how Donald Trump will eventually build a good relationship with the most important neighbour of U.S.
For JPY
The meeting of Trump & Abe will definitely provide more sentiment to Japanese Yen, nevertheless, from the fundamental perspective, Japan simply cannot raise their currency value at all.
This means Japan might compromises with U.S and move auto productions to U.S, and/ore reinvest more manufacturing in U.S.
These are all good steps to take but Japan cannot stop easing as this is a more fundamental economic issue.
Therefore, fundamentally speaking, JPY will still remain a bearish currency to sell.
For CHF
it’s a negative currency fundamentally but only react with the risk sentiment nowadays. We don’t have any long-term view aside from buying/selling with the sentiment.
Future positions
EUR shorts trimmed by 6K
GBP shorts trimmed by 4K
JPY shorts trimmed by 9K
CHF shorts trimmed by 3K
CAD Longs unchanged
AUD Longs increase by 2K
NZD shorts trimmed by 9K
Today we saw UK Manufacturing production m/m came out as positive deviation, not only that, all the following datas from Trade Balance, Industrial output month to month and year to year were all positive deviations.
This was a very strong indicator to show the resilient fundamental strength of UK regardless of the post Brexit.
In NY session we also saw positive deviation from Employment datas from Canada, the employment change although was lower than last time but a huge upbeat than the expected number.
The Unemployment rate also dropped 0.1% while the Participation rate actually raise up 0.1%.
This strong labour indicator plus last week’s positive GDP data have injected a whole new strength into CAD.
Today we also had IEA report for the oil market outlook, the demand has increased and OPEC members had also met 90% and more of their target curb volume, which was more than previous 80%.
This positive sentiment has caused oil market to finish the day with another green candle to give us 3rd consecutive days of uptrend.
Equity markets were largely green as well to give us a strong risk on sentiment.
The biggest news today was the meeting between Donald Trump and Japan PM Abe. They held a joint conference this afternoon and are going to spend the weekend together discuss more issues.
As expected, there weren’t too much insight for this meeting for now, but the general tone between Japan and U.S has been very friendly, and today was no exception.
For EUR
without any major updates, EUR still has the same outlook with fundamental bearish from the ECB easing to sentimental bearish from Dutch, France and German elections and the Greek Debt negotiations.
For GBP
the fundamental datas today from UK have once again showed the market how much strength UK have regardless of Post Brexit. This has been a very concurrent and consistent picture and we can really certain that the economic side of UK is very strong, at least for now.
The biggest bearish element is of course the future negotiation for Brexit and the triggering of Article 50 which is about to come in less than a month.
For USD
the court ruling yesterday to halt the Travel Ban, the phone call with Chinese Xi and the meeting with Abe plus the tax plan announcement in 2 weeks time; all these events have provided a fresh new bullish sentiment for USD. Donald Trump has soften his stance and market has calmed down to know that he is after all a business man.
Moreover, the defeat in the federal court also showed the strength of the constitutional system in U.S.
Meanwhile, the fundamental datas from U.S have continued to provide a solid picture.
The risk is still the uncertainty of policies, comments and executive orders from Donald Trump.
But as mentioned, as soon as crowds start to get used to his pattern, the sentiment will eventually die down and things will revert back to the U.S fundamentals - which is still looking very positive for now.
For AUD
Commodity currencies had enjoyed a great ride today, with AUD taking the lead and NZD & CAD came after.
The risk on sentiment has benefited all the commodity currencies, from yesterday’s positive Chinese Trade Balance, to today’s IEA report on oil demand and OPEC fulfillment.
For NZD
NZD has recovered and found its ground from the large drop of RBNZ jawboning. As mentioned, the fundamental side of NZD is still very solid and once the short-term negative sentiment passes, NZD should revert back to its fundamental strength.
For CAD
CAD has become one of our favourite currency, with the internal strength that are reflected by its fundamental datas, to the external Macro strength of the oil market, the only risk is still the renegotiation of NAFTA deal which we think will not be a disaster judging by how Donald Trump will eventually build a good relationship with the most important neighbour of U.S.
For JPY
The meeting of Trump & Abe will definitely provide more sentiment to Japanese Yen, nevertheless, from the fundamental perspective, Japan simply cannot raise their currency value at all.
This means Japan might compromises with U.S and move auto productions to U.S, and/ore reinvest more manufacturing in U.S.
These are all good steps to take but Japan cannot stop easing as this is a more fundamental economic issue.
Therefore, fundamentally speaking, JPY will still remain a bearish currency to sell.
For CHF
it’s a negative currency fundamentally but only react with the risk sentiment nowadays. We don’t have any long-term view aside from buying/selling with the sentiment.
Future positions
EUR shorts trimmed by 6K
GBP shorts trimmed by 4K
JPY shorts trimmed by 9K
CHF shorts trimmed by 3K
CAD Longs unchanged
AUD Longs increase by 2K
NZD shorts trimmed by 9K