We started the London session with notable AUD weakness due to the previous Asian session negative Trade Balance which saw large drops in export, particular Iron Ore.
In London session we saw GBP Construction PMI came out in line and Flash CPI and Core CPI of Eurozone also came out in line and slightly better.
PPI m/m from EUR also came out slightly better while unemployment rate was in line.
Finally in NY session we had GDP datas from CAD both m/m and q/q annualized and m/m came out in line with expectation but lower than last time while q/q annualized came out better than expected but still lower than previous.
We had some strength into CAD but soon faded out and CAD was virtually unchanged as the results were largely expected.
Today the equity markets were mixed with negative closing for European markets but still positive closing for U.S markets.
The market is currently in neutral to risk on sentiment, and USD is notably strong cross the board as we saw bond yield went higher, both Gold & WTI dropped significantly due to USD pressures.
The equity markets also were pressured by strong USD and alone with higher yield, we expect USD to keep going higher from here.
The market is still digesting the fresh new possibility of March rate hike from Fed members’ comments and the generally positive speech by Donald Trump in his joint Congressional speech nights ago.
For EUR
We continued to have good economic datas from Eurozone, but nothing too out of reach and ECB still kept their firm stance of QE. The elections are still the headline for Eurozone with Dutch election coming up soon this month and French election in April.
We continue to hold a bearish view in EUR fundamentally and sentimentally.
For USD
The strength of dollar is obvious now from both fundamental perspective and sentimental aspects. Fed members’ hawkish stance has given USD a strong push alone with the already strong economic datas. The previous negative sentiment was mainly from Donald Trump and even that had been toned down and faded out now. We continue to hold a bullish view in USD fundamentally and sentimentally.
For GBP
The Brexit Bill is still in the Parliament and now we had conflict between Upper and Lower House in regards to the clause of “free movement of EU citizen in UK”. To put in simple statement, PM May wants to limit the free movement of EU citizen in UK especially for those who are already working and living in UK, as immigration was part of the deal in the Referendum. The Upper House (or lower, anyway) has removed that clause and now both parties are in battle.
As mentioned, March will be a dramatic month for UK due to this kind of political event and one thing for sure is that it will create uncertainty, and there is nothing investors hate more than uncertainty. Therefore, sentimentally GBP has remained to be very negative. However, the previous holding points for GBP were the strong economic datas, and we didn’t even have that nowadays as we started seeing more and more negative datas coming out from UK.
Because of that, we are now holding a fundamental and sentimental bearish view toward GBP.
For CAD
CAD has been largely sold off from Monday all the way until the BOC statement. There weren’t any catalysts to explain the CAD weakness, the oil market did drop sigfinantly but that only happened today. Most likely the selling of CAD was due to dovish stance of BOC and traders were pricing in for another dovish comments.
The BOC statement was indeed dovish as BOC completely disregards the recent positive datas and stating that they are “temporary”. BOC also disregards the inflations and also stating that they are “temporary” due to higher energy price and food price.
Basically, fundamental datas have showed enough strength for CAD to go upside but the central bank is very dovish for possible reasons that they’re really worry about the NAFTA deals and relationships with U.S.
We think CAD is still fundamentally strong especially versus weaker currencies but sentimentally it is negative due to BOC’s aspect.
For AUD
The negative Trade Balance for AUD was a blow yesterday, however, it has already been predicted as the whole AUD ride in 2017 was all based on speculations of commodities from China and speculators. We still haven’t seen any solid datas from AUD, even the positive GDP were all from higher energy and commodity prices. The whole economic strength of AUD is still in a large swing but nevertheless, it is still very strong against other weaker currencies. The only thing to watch out is not to get caught up at buying high.
For NZD
RBNZ continued to hold dovish stance for NZD but it was much better than before, and as mentioned, once the negative sentiment fades out, NZD will revert back to its fundamentals which we think is much stronger than AUD. Fundamentally we’re still bullish in NZD but sentimentally it’s still slightly bearish.
For JPY
Due to the strong dollar and a generally risk on sentiment, JPY has been pressured these few days. JPY continues to be a fundamental bearish currency but sentimentally neutral and will react to the external risk sentiment.
We also had new datas for Household Spending y/y which was negative than previous and expected numbers.
National Core CPI was better than previous and expected numbers but Tokyo Core CPI was a miss and in line with last time.
Not much insight or shock from these datas and the deflationary economy in Japan continues.
For CHF
It’s in the same spot as JPY but perhaps suffers more negative sentiment as it is geographically within the Eurozone which is part of the cause for global risk off sentiment nowadays.
We started the London session with notable AUD weakness due to the previous Asian session negative Trade Balance which saw large drops in export, particular Iron Ore.
In London session we saw GBP Construction PMI came out in line and Flash CPI and Core CPI of Eurozone also came out in line and slightly better.
PPI m/m from EUR also came out slightly better while unemployment rate was in line.
Finally in NY session we had GDP datas from CAD both m/m and q/q annualized and m/m came out in line with expectation but lower than last time while q/q annualized came out better than expected but still lower than previous.
We had some strength into CAD but soon faded out and CAD was virtually unchanged as the results were largely expected.
Today the equity markets were mixed with negative closing for European markets but still positive closing for U.S markets.
The market is currently in neutral to risk on sentiment, and USD is notably strong cross the board as we saw bond yield went higher, both Gold & WTI dropped significantly due to USD pressures.
The equity markets also were pressured by strong USD and alone with higher yield, we expect USD to keep going higher from here.
The market is still digesting the fresh new possibility of March rate hike from Fed members’ comments and the generally positive speech by Donald Trump in his joint Congressional speech nights ago.
For EUR
We continued to have good economic datas from Eurozone, but nothing too out of reach and ECB still kept their firm stance of QE. The elections are still the headline for Eurozone with Dutch election coming up soon this month and French election in April.
We continue to hold a bearish view in EUR fundamentally and sentimentally.
For USD
The strength of dollar is obvious now from both fundamental perspective and sentimental aspects. Fed members’ hawkish stance has given USD a strong push alone with the already strong economic datas. The previous negative sentiment was mainly from Donald Trump and even that had been toned down and faded out now. We continue to hold a bullish view in USD fundamentally and sentimentally.
For GBP
The Brexit Bill is still in the Parliament and now we had conflict between Upper and Lower House in regards to the clause of “free movement of EU citizen in UK”. To put in simple statement, PM May wants to limit the free movement of EU citizen in UK especially for those who are already working and living in UK, as immigration was part of the deal in the Referendum. The Upper House (or lower, anyway) has removed that clause and now both parties are in battle.
As mentioned, March will be a dramatic month for UK due to this kind of political event and one thing for sure is that it will create uncertainty, and there is nothing investors hate more than uncertainty. Therefore, sentimentally GBP has remained to be very negative. However, the previous holding points for GBP were the strong economic datas, and we didn’t even have that nowadays as we started seeing more and more negative datas coming out from UK.
Because of that, we are now holding a fundamental and sentimental bearish view toward GBP.
For CAD
CAD has been largely sold off from Monday all the way until the BOC statement. There weren’t any catalysts to explain the CAD weakness, the oil market did drop sigfinantly but that only happened today. Most likely the selling of CAD was due to dovish stance of BOC and traders were pricing in for another dovish comments.
The BOC statement was indeed dovish as BOC completely disregards the recent positive datas and stating that they are “temporary”. BOC also disregards the inflations and also stating that they are “temporary” due to higher energy price and food price.
Basically, fundamental datas have showed enough strength for CAD to go upside but the central bank is very dovish for possible reasons that they’re really worry about the NAFTA deals and relationships with U.S.
We think CAD is still fundamentally strong especially versus weaker currencies but sentimentally it is negative due to BOC’s aspect.
For AUD
The negative Trade Balance for AUD was a blow yesterday, however, it has already been predicted as the whole AUD ride in 2017 was all based on speculations of commodities from China and speculators. We still haven’t seen any solid datas from AUD, even the positive GDP were all from higher energy and commodity prices. The whole economic strength of AUD is still in a large swing but nevertheless, it is still very strong against other weaker currencies. The only thing to watch out is not to get caught up at buying high.
For NZD
RBNZ continued to hold dovish stance for NZD but it was much better than before, and as mentioned, once the negative sentiment fades out, NZD will revert back to its fundamentals which we think is much stronger than AUD. Fundamentally we’re still bullish in NZD but sentimentally it’s still slightly bearish.
For JPY
Due to the strong dollar and a generally risk on sentiment, JPY has been pressured these few days. JPY continues to be a fundamental bearish currency but sentimentally neutral and will react to the external risk sentiment.
We also had new datas for Household Spending y/y which was negative than previous and expected numbers.
National Core CPI was better than previous and expected numbers but Tokyo Core CPI was a miss and in line with last time.
Not much insight or shock from these datas and the deflationary economy in Japan continues.
For CHF
It’s in the same spot as JPY but perhaps suffers more negative sentiment as it is geographically within the Eurozone which is part of the cause for global risk off sentiment nowadays.