Major events for the day (Asian - London - NY - Asian)
Current Sentiment
Upcoming Tradable Risk Events
Our Game Plans for next Sessions (London to NY)
-The main catalyst today will still be the healthcare bill of U.S. As mentioned, if the bill is not passed, the market will doubt the ability of Donald Trump and all his promise of economic stimulus policies to whether any of them can be realized. This will create another bearish sentiment into USD. Trump tried to mention that he will focus on Tax Reform instead if the healthcare bill fails, but the fact is that the Tax Reform still needs Congress to pass the bill and therefore, a failed bill always creates negative sentiment for Trump. We did see some USD recovery but this will most likely fade out if the healthcare bill is not passed. On the other hand, if the bill is passed, USD should see further buying. The expected time for vote is at 2pm - 4pm EDT.
We can trade this event once we have the result of the vote and if pass, we can buy USD against Japanese Yen and if fail, we can sell USD against Japanese Yen.
Another trade we can do is to sell NZD upon risk off sentiment. The current risk on sentiment from Asia session had supported NZD but it still failed largely due to the miss on Trade Balance. If we see meaningful retirement in NZD later on in the session then we can sell NZD against safe heaven currency.
Another possible set up will be shorting GBP. The article 50 is expected to trigger next week, we should expect another new wave of selling into GBP and we can price into the event if we see some meaningful retracement in the GBP pairs.
Major events for the day (Asian - London - NY - Asian)
- We started the Asian session with no major risk events and all eyes were focusing on the upcoming healthcare bill in U.S. Market was still digesting the Terrorist attack in London but not too much reaction into the safe haven currencies.
- Japanese PM Abe’s scandal continued and so far not much reactions in the market, but if it ends up for him to resign then it will be a shock for market to doubt the future of the stimulus program.
- UK retail sales m/m 1.4% vs 0.4% expected, -0.5% previous
- UK retail sales y/y 3.7% vs 2.6% expected, 1.0% previous
- The retail sales in UK were beats for all expectations, however, GBP did not gain too much momentum as the market was keenly focusing on next week’s triggering of article 50 and further guidance of BOE in terms of the newest inflation report last week which had already surpassed the BOE target of 2%
- BOE Vlieghe (Dove) stated inflation doesn’t mean rate increase.
- U.S initial jobless claims 258K vs 240 expected, 243K previous
- U.S new home sales 592K vs 566K expected, 558K previous
- U.S Congress postponed vote on healthcare bill because Republican couldn’t get enough votes to pass.
- NZ Trade Balance -18m vs 160m expected, -257m previous
- BOJ Kuroda spoke today and no particular insight for the monetary policy, but since the economy and inflation had picked up recently in Japan, market was anticipating some neutral to hawkish tone, however, Kuroda stressed that there is no reason to reduce monetary accommodation, the stimulus and bond buying will continue. It makes sense because inflation is still way below the target of BOJ.
- U.S Congress is going to vote again today Friday.
- Trump also stated that he will focus on Tax Reforms if the Healthcare bill is failed to pass.
Current Sentiment
- Asian equities are in greens for now with Nikkei up 0.88%, Shanghai up 0.56%, HK up 0.05% and ASX up 0.8% from the red closing in NY sessions with S&P at 2345 and Dow at 20656. Gold is at 1243 and WTI still below $48. U.S 10 yrs yield at 2.43. The risk sentiment has turned on for now.
- We saw some recovery into USD and EUR vs safe heaven currencies as the risk sentiment is on, however, this does not benefit the commodity currencies especially NZD which suffered from large miss in Trade Balance previously and a general risk off sentiment previously due to the healthcare bill of U.S and declines in commodity prices.
- GBP also declines from the previous bullish momentum of hawkish BOE last week. Most likely the market is now starting to price in for further decline when the article 50 is triggered next week.
Upcoming Tradable Risk Events
- CAD CPI m/m 0.2% expected, 0.9% previous
- CAD Core CPI m/m 0.1% expected, 0.5% previous
Our Game Plans for next Sessions (London to NY)
-The main catalyst today will still be the healthcare bill of U.S. As mentioned, if the bill is not passed, the market will doubt the ability of Donald Trump and all his promise of economic stimulus policies to whether any of them can be realized. This will create another bearish sentiment into USD. Trump tried to mention that he will focus on Tax Reform instead if the healthcare bill fails, but the fact is that the Tax Reform still needs Congress to pass the bill and therefore, a failed bill always creates negative sentiment for Trump. We did see some USD recovery but this will most likely fade out if the healthcare bill is not passed. On the other hand, if the bill is passed, USD should see further buying. The expected time for vote is at 2pm - 4pm EDT.
We can trade this event once we have the result of the vote and if pass, we can buy USD against Japanese Yen and if fail, we can sell USD against Japanese Yen.
Another trade we can do is to sell NZD upon risk off sentiment. The current risk on sentiment from Asia session had supported NZD but it still failed largely due to the miss on Trade Balance. If we see meaningful retirement in NZD later on in the session then we can sell NZD against safe heaven currency.
Another possible set up will be shorting GBP. The article 50 is expected to trigger next week, we should expect another new wave of selling into GBP and we can price into the event if we see some meaningful retracement in the GBP pairs.