\n
Today we opened the market with no tier one datas in London session, then heading into NY session we had Trade Balance from Canada and U.S and Canadian number was lower than expected and previous while U.S trade balance was better than expected and previous.
The Canadian Building Permits m/m was also a disappointment.
The Ivey PMI number from Canada was also lower than previous and expected.
JOLTS Job Openings from U.S was slightly lower than expected but almost same as last one.
Heading into Asian session we saw Bank Lending y/y and Current Account from Japan, both were lower than expected and previous.
The equity markets were all green today to give us a risk on sentiment, but WTI had another huge drop day to close lower.
Here is our view:
For EUR
There is no major fundamental catalyst and right now all the focus is on the French election, the uncertainty is high and that has pressured EUR to the downside. We think once this short-term panic passes, EUR will regain ground especially if we see another dollar weakness or another risk sentiment from Donald Trump.
Right now the question really is “how much does the political sentiment influence the market behaviours in Europe?"
If Europeans or the world really believe French election will be the last straw for Eurozone, then EUR will continue to sink.
On the other hand, if most people look pass the short-term political drama, then EUR will regain strength very quickly.
For USD
The fundamental datas continued to be resilient, and the sentimental elements continued to be abundant. The court decision in regards to Travel Ban from Donald Trump will come out very soon, and that will be another catalyst for USD.
As for now, it’s really not much meaning to trade the fundamentals of USD, not because they’re not important, but because they’ve been very good to a point that there isn’t really surprise for the investors.
So people are looking for the real catalyst, the real catalyst which is from Donald Trump.
If the President can calm the market down, then USD will regain strength very quickly.
But most likely from his previous behaviour, there is more chance for him to rattle up the market. Furthermore, he might intentionally do these actions and comments knowing that will sink USD, because let’s not forget, Donald Trump would love to see USD tank in order to support the export.
So from the sentiment point of view, we still think USD is going to the downside.
For GBP
There is no major fundamental catalyst and the fundamental picture will most likely be the same, with the devaluation of GBP, we’re going to see more and more inflation datas show upside, and we’re also very likely to see lower consumption from retails sales datas etc due to the effect of high inflation.
These are not surprise results. GBP is acting sentimentally these days, exactly same as USD.
Right now the Brexit has gone through the Parliament and the trigger of article 50 is most likely to be around March or April. However, because of the involvement of the Parliament, markets seem to perceive it as a positive sign.
So market seems to digest the fact that Brexit is a reality by largely sold off GBP last week to strong recovery this week.
Because of that, we think the current sentiment has turned upside for GBP and although the risk of uncertainty from Brexit is still there, but it’s a good currency to buy against other currencies for now.
For CAD
We had some negative datas today from Canada and a large drop in oil to off set the previous strength of CAD. This Friday the employment data will be a real catalyst to tell us where CAD is going.
Furthermore, the oil market is now heading into an interesting picture, with continuous of output curb by OPEC and continuous of output grow by U.S Shale producers.
Things will get more complicated once Donald Trump really adds the 20% import tax in the near future, that will significant reduct the import of oil from U.S and boost the WTI
That will also effect the Brent Crude.
But how will effect CAD? That’s the tricky part because it really depends on how Canadian and U.S renegotiate the NAFTA deal, especially for the energy sector.
So trading CAD will become more in a Micro scale as we have to look into the details between the trade of CAD and U.S.
But as for now, CAD is still well supported fundamentally, however, that might change very fast in the near future.
For NZD & AUD
These 2 currencies are really the more confident buy on my list now. The RBA statement had gone by without too much dovish tone, once the big risk catalyst has been removed, AUD will resume its fundamental & sentimental picture.
Back then the Fundamental datas were a big worry for AUD, especially the contraction of GDP last year, however, since the RBA remained positive for the outlook, with the continuous demand for commodities from China, AUD will still enjoy a ride up for the near term.
NZD is in the same picture, with a even better fundamental picture and less volatilities from global market, today the GDT price was a good indicator to show the strong economy of NZD.
Of course, the RBNZ meeting is coming soon and we might have more clear direction from the central bank.
For JPY & CHF
It’s not that easy to trade these 2 currencies nowadays, because they really react to the global sentiment, which can be positive or negative not only from day to day but form session to session.
I don’t really have too much insight, but PM Abe is meeting with Trump this week, and that will provide some volatility into the global market, notably USD/JPY
It could really go either way, so watch out for the updates.
Today we opened the market with no tier one datas in London session, then heading into NY session we had Trade Balance from Canada and U.S and Canadian number was lower than expected and previous while U.S trade balance was better than expected and previous.
The Canadian Building Permits m/m was also a disappointment.
The Ivey PMI number from Canada was also lower than previous and expected.
JOLTS Job Openings from U.S was slightly lower than expected but almost same as last one.
Heading into Asian session we saw Bank Lending y/y and Current Account from Japan, both were lower than expected and previous.
The equity markets were all green today to give us a risk on sentiment, but WTI had another huge drop day to close lower.
Here is our view:
For EUR
There is no major fundamental catalyst and right now all the focus is on the French election, the uncertainty is high and that has pressured EUR to the downside. We think once this short-term panic passes, EUR will regain ground especially if we see another dollar weakness or another risk sentiment from Donald Trump.
Right now the question really is “how much does the political sentiment influence the market behaviours in Europe?"
If Europeans or the world really believe French election will be the last straw for Eurozone, then EUR will continue to sink.
On the other hand, if most people look pass the short-term political drama, then EUR will regain strength very quickly.
For USD
The fundamental datas continued to be resilient, and the sentimental elements continued to be abundant. The court decision in regards to Travel Ban from Donald Trump will come out very soon, and that will be another catalyst for USD.
As for now, it’s really not much meaning to trade the fundamentals of USD, not because they’re not important, but because they’ve been very good to a point that there isn’t really surprise for the investors.
So people are looking for the real catalyst, the real catalyst which is from Donald Trump.
If the President can calm the market down, then USD will regain strength very quickly.
But most likely from his previous behaviour, there is more chance for him to rattle up the market. Furthermore, he might intentionally do these actions and comments knowing that will sink USD, because let’s not forget, Donald Trump would love to see USD tank in order to support the export.
So from the sentiment point of view, we still think USD is going to the downside.
For GBP
There is no major fundamental catalyst and the fundamental picture will most likely be the same, with the devaluation of GBP, we’re going to see more and more inflation datas show upside, and we’re also very likely to see lower consumption from retails sales datas etc due to the effect of high inflation.
These are not surprise results. GBP is acting sentimentally these days, exactly same as USD.
Right now the Brexit has gone through the Parliament and the trigger of article 50 is most likely to be around March or April. However, because of the involvement of the Parliament, markets seem to perceive it as a positive sign.
So market seems to digest the fact that Brexit is a reality by largely sold off GBP last week to strong recovery this week.
Because of that, we think the current sentiment has turned upside for GBP and although the risk of uncertainty from Brexit is still there, but it’s a good currency to buy against other currencies for now.
For CAD
We had some negative datas today from Canada and a large drop in oil to off set the previous strength of CAD. This Friday the employment data will be a real catalyst to tell us where CAD is going.
Furthermore, the oil market is now heading into an interesting picture, with continuous of output curb by OPEC and continuous of output grow by U.S Shale producers.
Things will get more complicated once Donald Trump really adds the 20% import tax in the near future, that will significant reduct the import of oil from U.S and boost the WTI
That will also effect the Brent Crude.
But how will effect CAD? That’s the tricky part because it really depends on how Canadian and U.S renegotiate the NAFTA deal, especially for the energy sector.
So trading CAD will become more in a Micro scale as we have to look into the details between the trade of CAD and U.S.
But as for now, CAD is still well supported fundamentally, however, that might change very fast in the near future.
For NZD & AUD
These 2 currencies are really the more confident buy on my list now. The RBA statement had gone by without too much dovish tone, once the big risk catalyst has been removed, AUD will resume its fundamental & sentimental picture.
Back then the Fundamental datas were a big worry for AUD, especially the contraction of GDP last year, however, since the RBA remained positive for the outlook, with the continuous demand for commodities from China, AUD will still enjoy a ride up for the near term.
NZD is in the same picture, with a even better fundamental picture and less volatilities from global market, today the GDT price was a good indicator to show the strong economy of NZD.
Of course, the RBNZ meeting is coming soon and we might have more clear direction from the central bank.
For JPY & CHF
It’s not that easy to trade these 2 currencies nowadays, because they really react to the global sentiment, which can be positive or negative not only from day to day but form session to session.
I don’t really have too much insight, but PM Abe is meeting with Trump this week, and that will provide some volatility into the global market, notably USD/JPY
It could really go either way, so watch out for the updates.