15 February, 2017
The US Dollar
The Dollar retreats ahead of Yellen speech, as investors will want comments about the potential policy tightening in March. There are no major reasons to rush the rate hike, as economic information lacks indications of consistently strong underlying momentum. The growth of wages was weaker than expected, while core PCE is still below the FED target (printed 1.7% in January). Moreover, Yellen may surprise investors by expanding the FED’s toolkit, like targeting the yield curve of long maturity bonds by clearing their balance sheet or make good on the shortage by issuing new bonds. In this case, Dollar is risking to lose its main growth catalyst, as rate hikes timeframe may be greatly distorted.
The resignation of beleaguered Michael Flynn, Trump’s advisor in national security, could also bring some discomfort to the investors as they could lose their bearings in predicting some political decisions of the US government.
The European currency
Euro saw choppy action while maintaining a bullish bias despite the slowdown in the German GDP growth. Euro post minor gains against the Dollar and British Pound, EUR/USD support remains firm at 1.06 while further upturn is highly likely due to a selloff ahead of the Yellen speech. The Japanese Yen and Swiss Franc both advanced against the US Dollar on the rising demand for safe heavens.
The Russian Rouble
Russian rouble renews peaks, as the differential between inflation and CBR interest rate boosts the appeal of the currency, making it into the target for carrying trading. The Central bank may face sharp appreciation of the currency, while verbal interventions may be also a case to reverse rapid gains.
The Chinese Yuan
The Chinese inflation topped estimates due to the rise in steel prices and other commodities and global pickup of the manufacturing activity. Consumer inflation also rose due to the celebration of the Chinese New Year. The response to the Chinese equities was muted, as concerns hover over the economic growth underpinned with massive credit support. ShComp closed little above Tuesday opening.
The Greenback has certainly taken all chances to become an outsider on the Forex market this week...
The Chinese stock market closed on a positive territory, posting the biggest gain since the end of November 2016...
The Australian regulator is riven by contradictions. On the one hand, the economy requires lower rates...
The Asian stock market began the week with an advance, in anticipation...
The European currency extended its fall after the ECB official, Yves Mersch, denied speculations about QE tapering, making it clear that the regulator is not yet going to change its dovish views...
Oil prices are trading in positive territory on Tuesday, after the Iranian Oil Minister...
The comments of the FED officials Erik Rosengren and Loretta Mester...
The British Pound rose above the level of 1.24 after the Bank of England decision last week...
When it comes to the EUR/USD pair, then we have a descending channel on the weekly chart...