Happy 2017 everyone!
Hope you guys all had a wonderful 2016 and new year celebration, now we’re excited to start a whole new year.
This year will be another excited year with many global events to shake the market, the liquidity will be there.
Donald Trump will be sworn in officially in Jan and then the world is about to see his new policies and the effects of it.
The two major elections in Europe from Germany & France are another political events that will shake the world.
The Brexit will also be official as U.K will trigger article 50 this year and start the process of exit.
The China, U.S and Russian relationships continue to be uncertain while the middle east relationships are also uncertain with agendas on Israel settlement matters and Iran nuclear agreement.
The oil market also remains to be uncertain as the OPEC agreement is going to be tested this year.
The emerging markets continue to be uncertain ahead of the new leaders of U.S and many global events.
Gold price also expects to be ups and downs alone with the progress of the global events.
Global terrorist attacks also continue to be issues nationally and domestically.
These are just few of the major events for 2017, which already provide enough liquidity to give us many trading opportunities.
Our view for the 8 major currencies are:
EURO
EUR continues to be the weakest currency fundamentally, as the ECB easing is expected to last until Dec while the populist movements have shaken the structure of Eurozone and its future. The increasing terrorist attacks also fuel up the nationalist movements which might further divide Eurozone. With political unstableness, the rising rate of FED and strong USD, there is no fundamental reason for anyone to hold EURO and therefore it is a weak currency on our list.
USD
USD is going to be the main star of 2017 as now the road for economic stimulus is clear with the new policies and cabinet members; roll backs of regulations on financial markets, tax cut plans, rising employment datas and inflations all signal a good year ahead for U.S. The risk lies in the new government and the untraditional behaviour for the newly elected president Trump. A trade war with China, attacks with Russia, conflicts in middle easts are all issues ahead of this year. Civil matters in racial and gender equality which divided the nation is another domestic problem in U.S. Nevertheless, the dollar is still expected to be the strongest currency for 2017.
GBP
It’s going to be another Roller coaster year for U.K. The future is extremely uncertain and all tied up with the negotiation of Brexit with Eurozone. The outcome can be very positive to very negative, and the truth is that no one knows - especially the main nations of Eurozone Germany and France are having their own big political event of election this year. A shuffle in the leaderships in these 2 nations will completely change the outcome for U.K as well.
AUD
China is dong well in 2016, regardless of issues in growing debts, asset bubbles and capital outflows, it is still full of economic promise and prosperity. This, has benefited Australia greatly. As we predict the continuous growing in China in 2017, Australia will also be lifted by its largest trading partner and continue to enjoy a fruitful year of 2017. The major risk is the overheating housing market and that has been under control from the last few RBA statements, however, it is still an issue which might change the central bank outlooks.
NZD
NZD is in the similar position with AUD, benefited greatly by China and the rise of global diary price. RBNZ still has possibility to cut the interest rate as the economy and inflation are still low, but it is considered the top 3 currencies to hold in 2017 aside from USD & AUD.
CAD
Canada continues to be neutral on our list, the economic outlook is also neutral according from BOC. The GDP, inflation and employment datas are still not good enough, but not low enough for BOC to cut rate again - for now. The future of CAD is really going to go with the oil market and we will have to see how the oil market perform in 2017 under the OPEC agreements. The housing risk is another issue in Canada.
CHF
There isn’t really much to say about Swiss Franc, the SNB still maintain an outlook to devaluate their currency. As many political events lie ahead of us in Eurozone, we will expect many safe heaven affect - which means SNB will have to intervene again and again to protect their currency being overbought. Our view is negative for CHF for 2017 because of that.
JPY
Japan is in the similar situation with CHF, but the safe heaven effect is much larger. Furthermore, the last news from BOJ was quiet positive and they actually considered to raise rate in the near future for the first time. However, as for now, the low inflation market is still a major issue and therefore, JPY is still a negative currency for us.
Our view is relatively the same as Dec 2016, that we’re still bullish in USD, with AUD & NZD come at second. But remember to only buy AUD & NZD against weaker currencies and you can also buy USD against AUD & NZD if you choose to do so as no currency can beat USD for now.
We’re still looking to sell EUR, JPY & CHF and still neutral with CAD alongside with the oil market. GBP is leaning toward bearish and can always sell it against USD.
This week the main risk events are
Tuesday Manufacture PMI from GBP which we’re looking for negative surprise to sell against USD.
GDT price from NZD is also tradable with positive surprise to buy against JPY and negative surprise to sell against USD.
USD ISM Manufacturing PMI is also a good risk event to trade if we have positive surprise to buy against JPY or EUR.
Wednesday the Construction PMI from GBP is another event to sell with negative surprise against USD.
We also have FOMC meeting minutes in the afternoon which is also tradable with hawkish statements to buy USD against JPY or EUR.
Thursday we have Service PMI from GBP which is the most important PMI for U.K and we’re also looking to sell upon negative surprise against USD.
USD ISM Non-Manufacturing PMI is also out today and can also be traded with positive surprise to buy against JPY or EUR.
Curde oil inventories will also come out this day.
Finally Friday will be big events day with USD Non-Farm payroll, average hourly earnings and unemployment rate and CAD employment change and unemployment rate.
We are looking to buy USD with positive surprise against EUR & JPY. We’re looking to either sell CAD or buy CAD upon negative or positive surprise.
If selling CAD we can do it against USD ONLY IF the USD datas are also positive. Or else you can sell CAD against AUD. If buying CAD we can do it against JPY or EUR.
Happy 2017 everyone!
Hope you guys all had a wonderful 2016 and new year celebration, now we’re excited to start a whole new year.
This year will be another excited year with many global events to shake the market, the liquidity will be there.
Donald Trump will be sworn in officially in Jan and then the world is about to see his new policies and the effects of it.
The two major elections in Europe from Germany & France are another political events that will shake the world.
The Brexit will also be official as U.K will trigger article 50 this year and start the process of exit.
The China, U.S and Russian relationships continue to be uncertain while the middle east relationships are also uncertain with agendas on Israel settlement matters and Iran nuclear agreement.
The oil market also remains to be uncertain as the OPEC agreement is going to be tested this year.
The emerging markets continue to be uncertain ahead of the new leaders of U.S and many global events.
Gold price also expects to be ups and downs alone with the progress of the global events.
Global terrorist attacks also continue to be issues nationally and domestically.
These are just few of the major events for 2017, which already provide enough liquidity to give us many trading opportunities.
Our view for the 8 major currencies are:
EURO
EUR continues to be the weakest currency fundamentally, as the ECB easing is expected to last until Dec while the populist movements have shaken the structure of Eurozone and its future. The increasing terrorist attacks also fuel up the nationalist movements which might further divide Eurozone. With political unstableness, the rising rate of FED and strong USD, there is no fundamental reason for anyone to hold EURO and therefore it is a weak currency on our list.
USD
USD is going to be the main star of 2017 as now the road for economic stimulus is clear with the new policies and cabinet members; roll backs of regulations on financial markets, tax cut plans, rising employment datas and inflations all signal a good year ahead for U.S. The risk lies in the new government and the untraditional behaviour for the newly elected president Trump. A trade war with China, attacks with Russia, conflicts in middle easts are all issues ahead of this year. Civil matters in racial and gender equality which divided the nation is another domestic problem in U.S. Nevertheless, the dollar is still expected to be the strongest currency for 2017.
GBP
It’s going to be another Roller coaster year for U.K. The future is extremely uncertain and all tied up with the negotiation of Brexit with Eurozone. The outcome can be very positive to very negative, and the truth is that no one knows - especially the main nations of Eurozone Germany and France are having their own big political event of election this year. A shuffle in the leaderships in these 2 nations will completely change the outcome for U.K as well.
AUD
China is dong well in 2016, regardless of issues in growing debts, asset bubbles and capital outflows, it is still full of economic promise and prosperity. This, has benefited Australia greatly. As we predict the continuous growing in China in 2017, Australia will also be lifted by its largest trading partner and continue to enjoy a fruitful year of 2017. The major risk is the overheating housing market and that has been under control from the last few RBA statements, however, it is still an issue which might change the central bank outlooks.
NZD
NZD is in the similar position with AUD, benefited greatly by China and the rise of global diary price. RBNZ still has possibility to cut the interest rate as the economy and inflation are still low, but it is considered the top 3 currencies to hold in 2017 aside from USD & AUD.
CAD
Canada continues to be neutral on our list, the economic outlook is also neutral according from BOC. The GDP, inflation and employment datas are still not good enough, but not low enough for BOC to cut rate again - for now. The future of CAD is really going to go with the oil market and we will have to see how the oil market perform in 2017 under the OPEC agreements. The housing risk is another issue in Canada.
CHF
There isn’t really much to say about Swiss Franc, the SNB still maintain an outlook to devaluate their currency. As many political events lie ahead of us in Eurozone, we will expect many safe heaven affect - which means SNB will have to intervene again and again to protect their currency being overbought. Our view is negative for CHF for 2017 because of that.
JPY
Japan is in the similar situation with CHF, but the safe heaven effect is much larger. Furthermore, the last news from BOJ was quiet positive and they actually considered to raise rate in the near future for the first time. However, as for now, the low inflation market is still a major issue and therefore, JPY is still a negative currency for us.
Our view is relatively the same as Dec 2016, that we’re still bullish in USD, with AUD & NZD come at second. But remember to only buy AUD & NZD against weaker currencies and you can also buy USD against AUD & NZD if you choose to do so as no currency can beat USD for now.
We’re still looking to sell EUR, JPY & CHF and still neutral with CAD alongside with the oil market. GBP is leaning toward bearish and can always sell it against USD.
This week the main risk events are
Tuesday Manufacture PMI from GBP which we’re looking for negative surprise to sell against USD.
GDT price from NZD is also tradable with positive surprise to buy against JPY and negative surprise to sell against USD.
USD ISM Manufacturing PMI is also a good risk event to trade if we have positive surprise to buy against JPY or EUR.
Wednesday the Construction PMI from GBP is another event to sell with negative surprise against USD.
We also have FOMC meeting minutes in the afternoon which is also tradable with hawkish statements to buy USD against JPY or EUR.
Thursday we have Service PMI from GBP which is the most important PMI for U.K and we’re also looking to sell upon negative surprise against USD.
USD ISM Non-Manufacturing PMI is also out today and can also be traded with positive surprise to buy against JPY or EUR.
Curde oil inventories will also come out this day.
Finally Friday will be big events day with USD Non-Farm payroll, average hourly earnings and unemployment rate and CAD employment change and unemployment rate.
We are looking to buy USD with positive surprise against EUR & JPY. We’re looking to either sell CAD or buy CAD upon negative or positive surprise.
If selling CAD we can do it against USD ONLY IF the USD datas are also positive. Or else you can sell CAD against AUD. If buying CAD we can do it against JPY or EUR.