Recap from Last Week Feb 6th - Feb 12th
Fundamentally, the major catalysts were the RBA rate decision and policy which all came out as more hawkish than expected, this has help AUD to surge all week.
On top of that, Chinese Trade Balance also came out largely positive to fuel up the global demands. All commodities were benefited from this risk on sentiment.
Canada released positive employment datas and reports showed OPEC members’ output curb target had been reached in 90% or more.
These fundamental events have pushed CAD to a new high.
NZD on the other hand was pressured after the RBNZ meeting where the central bank released a dovish comment and talked down NZD on the previous expectation of hawkish talk. NZD dropped significantly but finished the week with some recovery due to the risk on sentiment.
Sentimentally, we started the week with risk of sentiment from all the previous comments and actions of Donald Trump, only to have the sentiment shifted to the upside when the Court on the Travel Ban issue ruled against him, the long awaited phone call with Chinese PM Xi and Friday the joint meeting with Japan PM Abe.
All U.S stock markets closed at record high on Friday.
Preview for this week
This week is another week full of sentimental issues. The market is most likely to be driven by political and geopolitical events at least the first half year of 2017.
Donald Trump is set to release a new tax plan very soon, a meeting with Canadian PM Trudeau is set on Monday to discuss NAFTA, further statements and updates from this weekend’s meeting with Japan PM Abe are also expected.
FED Yellen is scheduled to speak and testify next week. This will be a very important catalyst for USD.
EU & Canada is set to vote and sign the official Trade Deal this week.
For EUR (Fundamentally bearish & Sentimentally Bearish)
Over the weekend, Germany elected a new president to take office in March. The result was widely expected, but it continued to show the political events that will largely effect the European market this year as the new president is from the rival party of the current PM Markel.
French election continues to create market sentiment as well.
Top officials from ECB signalled that the central bank will continue its implemented QE program as scheduled until the end of 2017. This was a big blow for Germany as it has hoped ECB will end the program faster.
This of course is another fundamental bearish sign for EUR.
For USD (Fundamentally Bullish & Sentimentally Neutral)
FED Daniel Tarullo resigned last week and this gave Trump administration another chance to point a new Fed member. This also signalled 2 things: Trump is intended to remove the financial regulations further which will be beneficial for the financial market, especially banking sectors. We’ve already seen banking share prices went up. The market will also have a risk on appetite because of this. However, this can also give Trump administration more room to delay rate hike or devaluate dollar by all means. Trump has attacked the high dollar value and the currency manipulations by other nations many times before.
This of course has put USD in a delicate situation.
For CAD (Fundamentally bullish & sentimentally bullish)
The great employment datas last week alone with the previous GDP data have injected new strong sentiment into CAD. The oil market is on the path of recovery and the major risk still comes from the renegotiation of NAFTA with U.S. Although the trade is largely balanced for U.S & Canada, unlike Mexico and U.S, but Canada certainty has more to lose if the NAFTA renegotiation goes badly. U.S is accounted for 20% of the Canadian export.
I also think the immigration issue and anti-terrorist approach will be a major discussion as the two governments now have very different view on refugees and Muslims in particular.
This week’s EU deal will be a positive sentiment for Canada if it is officially signed.
For GBP (Fundamentally neutral & sentimentally neutral)
The datas on Friday were largely positive, and economic strength continues to show up on the fundamental datas. The risk for UK still lies ahead with the triggering of article 50 and the negotiation with EU.
The inflation is also a concern as the consumption has slowed down because of it, however, the trade balance has benefited because of the devaluation of GBP.
We cannot know for sure where the economy is heading for UK, nor do we know where the sentiment is going with the Brexit negation.
For AUD (Fundamentally bullish & Sentimentally bullish)
The general picture is looking quiet positive for AUD now, regardless of the economic weakness from negative GDP data, soft employment datas and mixed inflation datas, the most important part is that RBA has injected confidence into the economic outlook and very less chance for further rate cut. The commodity prices are also on the rise with strong Trade Balance with China.
We will have another employment datas from AUD this week, but most likely AUD will remain strong regardless of the result, because the Macro strength is really strong now.
For NZD (Fundamentally bullish & sentimentally neutral)
Although the attempt to talk down its currency has succeeded by RBNZ last week, but we wonder how sustain this bearish NZD can be. The fact is that NZD is doing exceptionally well economically amount all other nations, there is very little political unstableness ahead of them, and the economic recovery is going well by the reflection of higher inflation, better GDP and ok employment datas.
As long as the fundamental strength remains, although RBNZ is not looking to hike rate soon, but NZD is still going to revert back to its current fundamental strength especially when we have more bearish uncertainty from other nations.
For JPY (fundamentally bearish & sentimentally neutral)
The economic outlook continues to effect by Trump administration’s new trade policies. More corporations in Japan gave a better confidence for the economic future due to weaken Yen, but a lot of concerns over Donald Trump and the relationship with U.S.
For CHF (fundamentally bearish & sentimentally neutral)
With lack of major news and continuous easing from SNB, CHF has changed its fundamental picture at all.
Sentimentally, the European elections & Brexit will most likely inject new safe heaven inflow into CHF, but once those events pass, CHF should revert back to the fundamental picture that is still a bearish currency.
Tradable Risk Events for This Week
Tuesday
GBP CPI Y/Y
Max 2.1%
Min 1.7%
EUR Flash GDP q/q
Max 0.7%
Min 0.4%
Wednesday
GBP Unemployment Rate
Max 4.9%
Min 4.7%
GBP Claimant Count Change
Max 5K
Min -0.9K
USD CPI
Max 0.4%
Min 0.2%
USD Retail Sales m/m
Max 0.5%
Min -0.2%
USD Industrial Output m/m
Max 0.4%
Min - 0.6%
AUD Employment
Max 20K
Min -5k
Unemployment Rate
Max 5.9%
Min 5.7%
Thursday
USD Housing Starts Number
Max 1.3M
Min 1.125 M
USD Initial Jobless Claims
Max 255K
Min 225K
Friday
GBP Retail Sales m/m
Max 1.7%
Min 0%
GBP Core Retail Sales m/m
Max 1.7%
Min -0.1%
GBP Retail Sales y/y
Max 4%
Min 2.4%
Recap from Last Week Feb 6th - Feb 12th
Fundamentally, the major catalysts were the RBA rate decision and policy which all came out as more hawkish than expected, this has help AUD to surge all week.
On top of that, Chinese Trade Balance also came out largely positive to fuel up the global demands. All commodities were benefited from this risk on sentiment.
Canada released positive employment datas and reports showed OPEC members’ output curb target had been reached in 90% or more.
These fundamental events have pushed CAD to a new high.
NZD on the other hand was pressured after the RBNZ meeting where the central bank released a dovish comment and talked down NZD on the previous expectation of hawkish talk. NZD dropped significantly but finished the week with some recovery due to the risk on sentiment.
Sentimentally, we started the week with risk of sentiment from all the previous comments and actions of Donald Trump, only to have the sentiment shifted to the upside when the Court on the Travel Ban issue ruled against him, the long awaited phone call with Chinese PM Xi and Friday the joint meeting with Japan PM Abe.
All U.S stock markets closed at record high on Friday.
Preview for this week
This week is another week full of sentimental issues. The market is most likely to be driven by political and geopolitical events at least the first half year of 2017.
Donald Trump is set to release a new tax plan very soon, a meeting with Canadian PM Trudeau is set on Monday to discuss NAFTA, further statements and updates from this weekend’s meeting with Japan PM Abe are also expected.
FED Yellen is scheduled to speak and testify next week. This will be a very important catalyst for USD.
EU & Canada is set to vote and sign the official Trade Deal this week.
For EUR (Fundamentally bearish & Sentimentally Bearish)
Over the weekend, Germany elected a new president to take office in March. The result was widely expected, but it continued to show the political events that will largely effect the European market this year as the new president is from the rival party of the current PM Markel.
French election continues to create market sentiment as well.
Top officials from ECB signalled that the central bank will continue its implemented QE program as scheduled until the end of 2017. This was a big blow for Germany as it has hoped ECB will end the program faster.
This of course is another fundamental bearish sign for EUR.
For USD (Fundamentally Bullish & Sentimentally Neutral)
FED Daniel Tarullo resigned last week and this gave Trump administration another chance to point a new Fed member. This also signalled 2 things: Trump is intended to remove the financial regulations further which will be beneficial for the financial market, especially banking sectors. We’ve already seen banking share prices went up. The market will also have a risk on appetite because of this. However, this can also give Trump administration more room to delay rate hike or devaluate dollar by all means. Trump has attacked the high dollar value and the currency manipulations by other nations many times before.
This of course has put USD in a delicate situation.
For CAD (Fundamentally bullish & sentimentally bullish)
The great employment datas last week alone with the previous GDP data have injected new strong sentiment into CAD. The oil market is on the path of recovery and the major risk still comes from the renegotiation of NAFTA with U.S. Although the trade is largely balanced for U.S & Canada, unlike Mexico and U.S, but Canada certainty has more to lose if the NAFTA renegotiation goes badly. U.S is accounted for 20% of the Canadian export.
I also think the immigration issue and anti-terrorist approach will be a major discussion as the two governments now have very different view on refugees and Muslims in particular.
This week’s EU deal will be a positive sentiment for Canada if it is officially signed.
For GBP (Fundamentally neutral & sentimentally neutral)
The datas on Friday were largely positive, and economic strength continues to show up on the fundamental datas. The risk for UK still lies ahead with the triggering of article 50 and the negotiation with EU.
The inflation is also a concern as the consumption has slowed down because of it, however, the trade balance has benefited because of the devaluation of GBP.
We cannot know for sure where the economy is heading for UK, nor do we know where the sentiment is going with the Brexit negation.
For AUD (Fundamentally bullish & Sentimentally bullish)
The general picture is looking quiet positive for AUD now, regardless of the economic weakness from negative GDP data, soft employment datas and mixed inflation datas, the most important part is that RBA has injected confidence into the economic outlook and very less chance for further rate cut. The commodity prices are also on the rise with strong Trade Balance with China.
We will have another employment datas from AUD this week, but most likely AUD will remain strong regardless of the result, because the Macro strength is really strong now.
For NZD (Fundamentally bullish & sentimentally neutral)
Although the attempt to talk down its currency has succeeded by RBNZ last week, but we wonder how sustain this bearish NZD can be. The fact is that NZD is doing exceptionally well economically amount all other nations, there is very little political unstableness ahead of them, and the economic recovery is going well by the reflection of higher inflation, better GDP and ok employment datas.
As long as the fundamental strength remains, although RBNZ is not looking to hike rate soon, but NZD is still going to revert back to its current fundamental strength especially when we have more bearish uncertainty from other nations.
For JPY (fundamentally bearish & sentimentally neutral)
The economic outlook continues to effect by Trump administration’s new trade policies. More corporations in Japan gave a better confidence for the economic future due to weaken Yen, but a lot of concerns over Donald Trump and the relationship with U.S.
For CHF (fundamentally bearish & sentimentally neutral)
With lack of major news and continuous easing from SNB, CHF has changed its fundamental picture at all.
Sentimentally, the European elections & Brexit will most likely inject new safe heaven inflow into CHF, but once those events pass, CHF should revert back to the fundamental picture that is still a bearish currency.
Tradable Risk Events for This Week
Tuesday
GBP CPI Y/Y
Max 2.1%
Min 1.7%
EUR Flash GDP q/q
Max 0.7%
Min 0.4%
Wednesday
GBP Unemployment Rate
Max 4.9%
Min 4.7%
GBP Claimant Count Change
Max 5K
Min -0.9K
USD CPI
Max 0.4%
Min 0.2%
USD Retail Sales m/m
Max 0.5%
Min -0.2%
USD Industrial Output m/m
Max 0.4%
Min - 0.6%
AUD Employment
Max 20K
Min -5k
Unemployment Rate
Max 5.9%
Min 5.7%
Thursday
USD Housing Starts Number
Max 1.3M
Min 1.125 M
USD Initial Jobless Claims
Max 255K
Min 225K
Friday
GBP Retail Sales m/m
Max 1.7%
Min 0%
GBP Core Retail Sales m/m
Max 1.7%
Min -0.1%
GBP Retail Sales y/y
Max 4%
Min 2.4%