Yesterday the BOJ monetary policy was basically the same as expected, with higher GDP outlook but lower inflation outlook plus some neutral tone. This didn’t really provide too much volatility or direction for the market and JPY was still considered a negative currency.
BOJ press conference and ECB Draghi speaks didn’t really provide too much movement for the market either.
The real catalyst came in first when we had higher CPI from both French and Spain to start driving the EUR up, then came with Net Lending data from GBP which was a negative surprise to tank GBP and further boosted EUR.
Finally a series of EUR datas including Core CPI, CPI, Prelim Flash GDP and Unemployment rate were all very positive to further support EUR.
In NY session, we had GDP from CAD which also came out positive following by CB Consumer Confidence from US which came out negative.
Finally we ended the session with employment datas from NZD which were also negative.
We also just had the NBS Manufacturing PMI from China which also came out slightly better than expected but lower than previous.
Sentimentally, the market continued to digest the negative sentiment from Donald Trump’s policies, and during European session they were ok for a while, then came with another comments from Donald Trump in regards to China, Japan & EUR being grossly depreciation to help Germany’s trade. The market has anticipated it as another protectionism stance to further sell the USD. The currency war is on the rise once again.
The equity markets finished the day in red in both European and America markets while gold is also up and U.S yield is down.
We had very little movement over oil market for today but CAD was one of the winners as positive GDP data supported by weak dollar to boost the strength of CAD.
Right now our view for the market:
For EUR, the promising European datas from this year have continued to support EUR, on top of that, the negative sentiment from USD from Donald Trump has now surpassed the negative sentiment of European countries’ major election. Investors are now more certain with the outlook for EUR, yes ECB still keeps the interest rate low, but it will be better and at least, it’s more stable - that’s the mind of the investors now.
Because of that, we think EUR has now become a very attractive currency to buy.
For USD, the volatility from Donald Trump was larger than what we expected. Not only we have under estimated the market’s reaction to his comments, we have also under estimate the power of the president and his influences over the Republican controlled congress.
Tomorrow’s FED meeting will provide us more direction but now sensing Donald Trump’s way of action, I think it’s very likely to see USD taking a downward turn for the next few month.
Meanwhile, the current datas have supported USD but nothing really surprise have came out to give it another boost.
With all these conclusion, this does not mean we’re not going to trade USD, but it does mean that we’re not going to trade it for long-term or even mid-term.
We’re only interested in buying USD during intraday trade as the sentiment is too hard to predict and the reaction is also hard to predict, for now.
For CAD, The good GDP data was the missing piece to make the neutral currency of CAD to be more bullish. As mentioned, the oil market fundamentally has supported CAD for sometime, but the economic datas from CAD had been neutral to clueless, but today’s GDP is a great boost for CAD to now have good employment datas, good GDP data and ok inflation data.
Because of that, CAD is a good currency to buy for now.
For GBP, the UK Parliament starts the debate for Bill these few days and we should have some news soon in regards to Brexit plan.
Aside from that, there weren’t really any catalyst to push GBP either way. Today’s Net Lending data has completely tanked it during the European session but we also saw GBP gaining tremendous strength over USD.
GBP is really a neutral currency now and because of that, you can trade it as a counter partner to stronger and weaker currency with proper technical levels.
For NZD, we have been waiting for a good employment data today to complete the overall strong picture of NZD and unfortunately, that was not the case.
The unemployment rate has raised up more than previous 2 quarters. Although still not that bad, but it definitely pressured the ongoing rally of NZD from past weeks.
The current risk off sentiment also pressured NZD & AUD.
We still think NZD is a good currency to buy but wait for a better technical level to get in.
For AUD, we don’t have any major catalyst for now but today’s Chinese data was still in line with expectation, and AUD is more like a neutral to bullish currency which reacts to the sentiment.
We think AUD is also a good buy when versus weaker currency but we do have less confidence to hold it in a mid-term to long-term perspective because AUD still lacks of economic strength on its own with the recent poor datas.
For JPY & CHF, both had no major catalysts and continued to hold their central banks’ policies to depreciate the currencies.
The current risk off sentiment is largely beneficial for both currencies, and because there are most likely more to come from Donald Trump, we expect JPY & CHF to continue enjoying the risk off sentiment from time to time.
Yesterday the BOJ monetary policy was basically the same as expected, with higher GDP outlook but lower inflation outlook plus some neutral tone. This didn’t really provide too much volatility or direction for the market and JPY was still considered a negative currency.
BOJ press conference and ECB Draghi speaks didn’t really provide too much movement for the market either.
The real catalyst came in first when we had higher CPI from both French and Spain to start driving the EUR up, then came with Net Lending data from GBP which was a negative surprise to tank GBP and further boosted EUR.
Finally a series of EUR datas including Core CPI, CPI, Prelim Flash GDP and Unemployment rate were all very positive to further support EUR.
In NY session, we had GDP from CAD which also came out positive following by CB Consumer Confidence from US which came out negative.
Finally we ended the session with employment datas from NZD which were also negative.
We also just had the NBS Manufacturing PMI from China which also came out slightly better than expected but lower than previous.
Sentimentally, the market continued to digest the negative sentiment from Donald Trump’s policies, and during European session they were ok for a while, then came with another comments from Donald Trump in regards to China, Japan & EUR being grossly depreciation to help Germany’s trade. The market has anticipated it as another protectionism stance to further sell the USD. The currency war is on the rise once again.
The equity markets finished the day in red in both European and America markets while gold is also up and U.S yield is down.
We had very little movement over oil market for today but CAD was one of the winners as positive GDP data supported by weak dollar to boost the strength of CAD.
Right now our view for the market:
For EUR, the promising European datas from this year have continued to support EUR, on top of that, the negative sentiment from USD from Donald Trump has now surpassed the negative sentiment of European countries’ major election. Investors are now more certain with the outlook for EUR, yes ECB still keeps the interest rate low, but it will be better and at least, it’s more stable - that’s the mind of the investors now.
Because of that, we think EUR has now become a very attractive currency to buy.
For USD, the volatility from Donald Trump was larger than what we expected. Not only we have under estimated the market’s reaction to his comments, we have also under estimate the power of the president and his influences over the Republican controlled congress.
Tomorrow’s FED meeting will provide us more direction but now sensing Donald Trump’s way of action, I think it’s very likely to see USD taking a downward turn for the next few month.
Meanwhile, the current datas have supported USD but nothing really surprise have came out to give it another boost.
With all these conclusion, this does not mean we’re not going to trade USD, but it does mean that we’re not going to trade it for long-term or even mid-term.
We’re only interested in buying USD during intraday trade as the sentiment is too hard to predict and the reaction is also hard to predict, for now.
For CAD, The good GDP data was the missing piece to make the neutral currency of CAD to be more bullish. As mentioned, the oil market fundamentally has supported CAD for sometime, but the economic datas from CAD had been neutral to clueless, but today’s GDP is a great boost for CAD to now have good employment datas, good GDP data and ok inflation data.
Because of that, CAD is a good currency to buy for now.
For GBP, the UK Parliament starts the debate for Bill these few days and we should have some news soon in regards to Brexit plan.
Aside from that, there weren’t really any catalyst to push GBP either way. Today’s Net Lending data has completely tanked it during the European session but we also saw GBP gaining tremendous strength over USD.
GBP is really a neutral currency now and because of that, you can trade it as a counter partner to stronger and weaker currency with proper technical levels.
For NZD, we have been waiting for a good employment data today to complete the overall strong picture of NZD and unfortunately, that was not the case.
The unemployment rate has raised up more than previous 2 quarters. Although still not that bad, but it definitely pressured the ongoing rally of NZD from past weeks.
The current risk off sentiment also pressured NZD & AUD.
We still think NZD is a good currency to buy but wait for a better technical level to get in.
For AUD, we don’t have any major catalyst for now but today’s Chinese data was still in line with expectation, and AUD is more like a neutral to bullish currency which reacts to the sentiment.
We think AUD is also a good buy when versus weaker currency but we do have less confidence to hold it in a mid-term to long-term perspective because AUD still lacks of economic strength on its own with the recent poor datas.
For JPY & CHF, both had no major catalysts and continued to hold their central banks’ policies to depreciate the currencies.
The current risk off sentiment is largely beneficial for both currencies, and because there are most likely more to come from Donald Trump, we expect JPY & CHF to continue enjoying the risk off sentiment from time to time.