During the London session we had German Prelim CPI m/m which came out less than expected. However, the majority of European nations have been enjoyed a very good start in 2017 economically. Although this alone will not change the plan of ECB, but it does push Euro into a positive territory especially when we have a risk off sentiment like today.
The soft than expected German CPI will also give ECB more reason to hold on their policy and this will put EUR in a fundamental bearish currency.
We also had Spanish Flash GDP q/q which came out as expected.
The KOF indicator from CHF was a negative deviation, this will once again put CHF in a negative territory, but as mentioned, what drives CHF was never the economics but the safe heaven status.
Then during NY session we had Core PCE, Personal Spending and Pendign Home Sales m/m from US, all came out positive or in line with expectations.
The fundamental datas of US have once again showed a solid picture.
Then during Asian session we just had Household Spending y/y from Japan which was better than expected and the unemployment was still the same while Industrial output prelim m/m was better than expected.
Of course the real catalyst for Japan will be tonight’s BOJ rate decision and monetary statement.
Oil market was down today but not much movement while equity markets were all red to paint a risk off sentiment.
Sentimentally, the biggest driver was Donald Trump’s executive order on immigration/visitors to U.S over the weekend. This has caused some panic and money has flowed into safe heaven currencies all day.
As mentioned, this movement is predictable, however, we never now how large and sustained this movement will be for safe heaven currencies.
The BOJ decision later tonight will provide more catalyst for our risk sentiment of the week.
Right now our view is still the same for the global market, the fundamental datas will be the main driver for a good economic year but the sentimental emotions fro geopolitical issues will be a main pressure.
For USD, today’s fundamental datas have confirmed the promising outlook for U.S economy and the confirmed path for higher equities, higher yield and higher USD. However, we also witnessed the political sentiment from Donald Trump’s executive order could bring down the market. Although things will die down eventually and revert back to the fundamental, but the questions are how long? how large is the sentimental volatility? how high is the market emotions of fear?
This will be the hardest choice for traders to trade as you might be caught onto the fire of sentimental panic, but you might also be caught on a great opportunity to buy low.
For EUR, as mentioned, it will most likely to react to what ever happened to USD and the world. As we had a down day for USD and equities, most likely we would have an up day for EUR.
For GBP, it still enjoyed the sentiment drive but as one of the risk on currency, it will also be pressured when the risk sentiment is off. Without too much internal news, GBP will most likely react as a counter party to USD as well.
For CAD, we had a terrorist attack in Quebec last night which although was not large, but was rare in Canada. This has not yet caused any panic but this could be the beginning of policy change. As the closest neighbour of U.S, we will see how Canada reacts to U.S immigration policy. The oil market had no reaction and we will have both side of force to hedge out each other; a strong force from OPEC curb to help oil market and a strong force from U.S shale producers’ output to pressure the oil market.
For AUD & NZD, both were pressured from the current risk off sentiment but should still perform well over USD.
For JPY & CHF, they are both the winners of today as the safe heaven currency status.
****my personal view****
I think the temporary panic movement will die down very soon as the executive order on immigration really have no immediate effect for the U.S economy, as we have continued to see datas supporting it.
Second, the ban on Muslim was always Donald’s election slogan so there really wasn’t any surprise on this event if any.
Third, judging by major indices, yes markets were down, but not collapsing, U.S bond yields are virtually unchanged and gold was only up for $2. The macro view for U.S is still strong and as mentioned, a lot of fundamental traders will actually get into buying USD at this kind of dips.
During the London session we had German Prelim CPI m/m which came out less than expected. However, the majority of European nations have been enjoyed a very good start in 2017 economically. Although this alone will not change the plan of ECB, but it does push Euro into a positive territory especially when we have a risk off sentiment like today.
The soft than expected German CPI will also give ECB more reason to hold on their policy and this will put EUR in a fundamental bearish currency.
We also had Spanish Flash GDP q/q which came out as expected.
The KOF indicator from CHF was a negative deviation, this will once again put CHF in a negative territory, but as mentioned, what drives CHF was never the economics but the safe heaven status.
Then during NY session we had Core PCE, Personal Spending and Pendign Home Sales m/m from US, all came out positive or in line with expectations.
The fundamental datas of US have once again showed a solid picture.
Then during Asian session we just had Household Spending y/y from Japan which was better than expected and the unemployment was still the same while Industrial output prelim m/m was better than expected.
Of course the real catalyst for Japan will be tonight’s BOJ rate decision and monetary statement.
Oil market was down today but not much movement while equity markets were all red to paint a risk off sentiment.
Sentimentally, the biggest driver was Donald Trump’s executive order on immigration/visitors to U.S over the weekend. This has caused some panic and money has flowed into safe heaven currencies all day.
As mentioned, this movement is predictable, however, we never now how large and sustained this movement will be for safe heaven currencies.
The BOJ decision later tonight will provide more catalyst for our risk sentiment of the week.
Right now our view is still the same for the global market, the fundamental datas will be the main driver for a good economic year but the sentimental emotions fro geopolitical issues will be a main pressure.
For USD, today’s fundamental datas have confirmed the promising outlook for U.S economy and the confirmed path for higher equities, higher yield and higher USD. However, we also witnessed the political sentiment from Donald Trump’s executive order could bring down the market. Although things will die down eventually and revert back to the fundamental, but the questions are how long? how large is the sentimental volatility? how high is the market emotions of fear?
This will be the hardest choice for traders to trade as you might be caught onto the fire of sentimental panic, but you might also be caught on a great opportunity to buy low.
For EUR, as mentioned, it will most likely to react to what ever happened to USD and the world. As we had a down day for USD and equities, most likely we would have an up day for EUR.
For GBP, it still enjoyed the sentiment drive but as one of the risk on currency, it will also be pressured when the risk sentiment is off. Without too much internal news, GBP will most likely react as a counter party to USD as well.
For CAD, we had a terrorist attack in Quebec last night which although was not large, but was rare in Canada. This has not yet caused any panic but this could be the beginning of policy change. As the closest neighbour of U.S, we will see how Canada reacts to U.S immigration policy. The oil market had no reaction and we will have both side of force to hedge out each other; a strong force from OPEC curb to help oil market and a strong force from U.S shale producers’ output to pressure the oil market.
For AUD & NZD, both were pressured from the current risk off sentiment but should still perform well over USD.
For JPY & CHF, they are both the winners of today as the safe heaven currency status.
****my personal view****
I think the temporary panic movement will die down very soon as the executive order on immigration really have no immediate effect for the U.S economy, as we have continued to see datas supporting it.
Second, the ban on Muslim was always Donald’s election slogan so there really wasn’t any surprise on this event if any.
Third, judging by major indices, yes markets were down, but not collapsing, U.S bond yields are virtually unchanged and gold was only up for $2. The macro view for U.S is still strong and as mentioned, a lot of fundamental traders will actually get into buying USD at this kind of dips.