Greenback higher, but no incentives for big moves

21 February, 2017

Greenback higher, but no incentives for big moves

After a muted trading session on Monday due to the U.S. holiday, the USD is finally showing signs of strength in early Asian trade as investors await economic data, speeches from several Fed Presidents, and minutes of the latest FOMC meeting.

U.S. treasury yields moved up across the curve after declining for two consecutive days, albeit slightly, it still managed to provide the dollar a minor push.

The narrow trading ranges indicate that traders are reluctant to take big bets until they get a detailed plan on U.S. tax, trade, and spending plans. Some Ttweets from Trump related to such policies will create some noise, but I believe the sideway trading will resume until February 28 when the President addresses a joint session of in Congress.  This will pProbably this will provide a major indication on where the USD is headed, given that monetary policy seems to have lost much influence lately.

European political risks can’t be ignored either. The mounting nervousness over the outcome of France’s Presidential election is clearly reflecting in fixed income markets. The spreads between the French and German yields rose to post Eurozone crisis highs in 2012 after polls yesterday showed far-right candidate Marine Le Pen narrowing the gap with her opponents.

The positive news in Europe came from Brussels, as the gridlock between the European Union and the IMF over releasing a new tranche of financial aid somehow eased. However, it’s too early to rule out that an agreement could be reached. Greece will most likely refuse the implementations of new austerity measures, the IMF will keep pushing for debt reliefs, meanwhile Germans insist on IMF involvement.

PMI readings for the manufacturing and services sectors from France and Germany are anticipated expected to show that economic activity remained healthy during the month of February, but expect little impact on the Euro given the scale of political risks.

Traders will have the chance to hear from Mark Carney today when he testifies before the U.K. parliament’s Treasury Committee. What’s going to be interesting is that his testimony comes after Bank of England upgraded its growth forecast in February 2, and since then signs of weakness in the economy emerged. Markets are currently seeing less probability of BoE tightening this year, but if Carney indicates that higher interest rates are still on the table during U.K.’s negotiation period, sterling may find some support.


Source link  
USD stages comeback on CPI and retail data

It's been a positive day for US economic data as retail sales surprised analysts lifting to 0.2% (0.0% exp). This shows a strong build up in the period...

Currencies bound ahead of Fed decision

It is a quiet Wednesday in the currency markets. Traders are favoring to remain on the sidelines ahead of multiple key risk events...

Asian equities flat

Equities across the Asian markets were trading in a tight narrow range on Thursday, ignoring solid Chinese data and the new records on Wall Street, where the Dow Jones Industrial...


Inflation continues to worry FED

FOMC minutes were released today and painted some interesting pictures on the state of the US economy. So far FED members are calling for...

Pound struggles on uncertanity

Conviction in the pound seems to have fallen off the way side after the most recent days of trading with the pound taking further hits as it slides...

Geopolitical risks return to the front seat

Demand for safe havens returned on Monday as war of words between North Korea and the U.S. triggered flight to safety amongst investors...


RBA minutes offer guidance on economy

The Australian economy has hit the spotlights as the Reserve Bank of Australia meeting minutes are out. As usual it's quick to point the finger...

Softened sanctions on North Korea

Investors returned from the weekend with a high appetite for risk assets, sending the S&P 500 to a new record high on Monday, with global equities...

AUD traders bet on RBA minutes

The Australian dollar has surged in Monday trading as it looked to push through a key level of resistance at 0.7833, this is a bit of a surprise...

  


Share: