FOREX: Greenback Consolidates Early Decline, CHF & SEK Outperform
Apr-16 16:56
- Wednesday’s US session has witnessed relatively tight ranges in G10 currency markets, allowing the USD index to consolidate its initial move lower across APAC and early European trade. The ICE dollar index currently tracks at 99.50, just 50 pips from the 99.01 cycle lows that were printed last Friday.
- Weakness has been broad based against G10 peers, although the Swiss Franc and Swedish Krona have outperformed. For USDCHF specifically, the pair erased the entirety of the prior session’s bounce and leaves the pair vulnerable to a break below the 0.8100 mark, which would place the pair at fresh ten-year lows. A softer risk backdrop across global markets appears to have resumed the souring sentiment towards the dollar, and USDSEK’s 1% move lower has no idiosyncratic driver behind the move.
- The likes of EUR, AUD and NZD are all rising in line with the adjustment for the greenback, with EURUSD pushing back towards 1.14 and keeping bullish conditions firmly intact. Key focus remains on 1.1495, the Feb 10 2022 high. For AUDUSD, spot continues to edge back towards 0.6400, and a breach of 0.6409 (Feb 21 high) would likely prompt some further short covering for the pair. This may signal scope for a stronger recovery towards the US election highs at 0.6550.
- The Bank of Canada kept rates unchanged at 2.75%, in line with a slender majority of analysts. Together with higher crude prices, the CAD has been a beneficiary which has allowed USDCAD to edge back towards its recent lows. It is worth noting that Monday’s low came within 7 pips of the US election lows, located at 1.3822, a level of key short-term significance. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. Below here, 1.3744 marks the next target, a Fibonacci retracement.
- GBP remains a relative underperformer on Wednesday, reflective of a softer-than-expected set of March inflation data. Although GBPUSD hovers around unchanged on the session, spot remains above the prior breakout level of 1.3207, an important bull trigger for the pair.
- Thursday’s data highlights include New Zealand CPI and Australian unemployment, before the focus turns to the ECB decision, where a 25bp cut of its three key rates is widely expected.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GERMANY: Handelsblatt Report on Lingering Uncertainties Ahead of Bundestag
Mar-17 16:50
Ahead of tomorrow's special session in the Bundestag - within which we expect a vote on the major fiscal package - Handelsblatt write of last minute nerves among some lawmakers, and still lingering uncertainties around the event:
- One piece: "behind-the-scenes rumors say there are still serious concerns, especially among the CDU's policymakers, about loosening the debt brake for defense and establishing a special fund of half a trillion euros."
- And via their live blog: "there are likely to be several dissenters among the Green Party's ranks. According to participants, a test vote in the Green Party's parliamentary group resulted in one abstention and one undecided vote. A small single-digit number of members of parliament were sick."
US DATA: GDPNow Seen At -2.1% For Q1, Gold-Adjusted Estimate Mar 26
Mar-17 16:37
- The Atlanta Fed’s GDPNow for real GDP growth in Q1 was revised up to -2.1% from -2.4% in its Mar 6 update, although it marked a downgrade from the -1.6% tracked inter-released after the payrolls report of Mar 7 (as noted in the LinkedIn post from Atlanta Fed’s Higgins mentioned earlier).
- Today’s retail sales report, which as we noted showed signs of weak discretionary spending, has offset the inter-release upside seen post-payrolls for consumer spending. Compared to the -2.4% in the last 'full' release, the upward revision has come from a larger positive contributino from non-resi investment growth and changes in inventories.
- The LinkedIn post had also showed a gold-adjusted figure of +0.4% vs the -1.6% in that inter-release update. However: “Due to FOMC blackout policy, today’s post does not include an update of the version of the model described here that adjusts the standard GDPNow model forecast for foreign trade in gold. That adjusted model will again be updated after our first scheduled post-blackout update on March 26.”
US STOCKS: Midday Equities Roundup: Energy & Estate Management Leading
Mar-17 16:37
- Major U.S. stock indexes are trading mixed, the SPX Eminis near steady while the DJIA outperforms modestly weaker Nasdaq at midday. Currently, the DJIA trades up 188.34 points (0.45%) at 41678.97, S&P E-Minis up 6.75 points (0.12%) at 5699.5, Nasdaq down 81.7 points (-0.5%) at 17673.26.
- Energy and Real Estate sectors outperformed in the first half, oil and gas stocks leading gainers as crude prices rebounded (WTI +.41 at 67.59): Marathon Petroleum +2.61%, Targa Resources +2.45%, APA +2.37% and Valero Energy +2.13%.
- Investment trusts and management shares buoyed the Real Estate sector: BXP Inc +5.24%, Simon Property Group +2.55% and Iron Mountain +2.02%.
- On the flipside, Consumer Discretionary and Information Technology sectors underperformed in the first half, Tesla -6.44%, Ulta Beauty -2.25%, Garmin Ltd -1.85% and Deckers Outdoor -1.60% led laggers in the Discretionary sector.
- Despite strong gains by Intel +7.88% and Enphase +6.47%, the Tech sector underperformed as a whole with Super Micro Computer-1.92%, NVIDIA -1.71%, Broadcom -1.52% and Apple -1.36%.
