Currencies Struggling to Find Cohesive Direction

18 April, 2017

Currencies Struggling to Find Cohesive Direction

Our prop desk is finding some profitability off the back of long GBP positions with some of the less common crosses coming into play, including CAD and NZD. Short S&P and long USD/CHF trades remain in play.

Daily round up


Fundamental data is relatively thin on the ground today as European traders return from the long Easter weekend break. There are some building stats due for release from the US, but the key drivers seem to sit very much at the political level. These include factors such as the looming French election and how US foreign policy will play out next. We do however seem to be moving into a phase of more complicated price action than we’ve seen in recent weeks.

Fundamentals – currencies struggling to find cohesive direction 


EUR/GBP is testing levels we haven’t seen since late February as caution surrounding the outcome of the French Presidential elections takes a toll on confidence for the common currency. Investors are looking to de-risk Euro exposure, but given the general backdrop of geopolitical uncertainty we have right now, the safe havens are few and far between. This appears to have pushed the pound into favour coming out of the long weekend break in Europe, although sustaining these gains in the medium term could prove difficult. With little fundamental data due for release today that will drive either currency, it’s really going to be any update on French voter sentiment that has the potential to provide the most meaningful direction here in the short term.

Gold prices are retreating slightly following the long weekend, with the fact that the North Korean situation didn’t escalate further over the weekend alongside hopes that a diplomatic solution can be found here helping cap the rally short of the $1300/oz level. Comments by the US Treasury Secretary Steve Mnuchin which went against Donald Trump’s calls late last week that the greenback was too strong have also helped here, with the dollar index once again finding some space above the 100 mark. Again however this serves as a good illustration of the complex web of fundamental factors that are each likely to continue playing a part in driving asset prices in the months ahead – we appear to be moving into a period where it’s far from being a clear-cut game.

The Aussie dollar floundered off the back of the release of RBA meeting minutes overnight, which revealed a cautious mood at the central bank. A weaker than expected labour market is keeping wage pressures in check and this is in turn reigning in inflation. With little indication of a need to tighten monetary policy - other than perhaps to reign in house price inflation and consumer debt – that rally we saw for AUD/USD at the end of last week, inspired by Trump’s talking down of the greenback already seems to have run out of steam.

Volatility continues to prevail in terms of US equity indices with the S&P having already recovered yesterday’s losses. The big potential drivers here again remain those expected policy announcements from the Trump administration, including the idea that we may see a tax holiday to encourage US companies repatriating cash. If this progresses then the resulting slew of M&A activity alone would likely be sufficient to give equities another shot in the arm, although underlying P/E ratios would be left looking even more toppy. The sell-off has to come at some point – this very much remains a question of when, not if.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.


Source link  
Technical Analysis EUR/USD, XAU/USD

The H4 the price was unable to consolidate below 1.1400 (or see a 23.6% correction) of course this doesn’t mean that the currency pair won’t see a correction soon. If the pair surpasses 1.1400 near the intersection with the limit of the upper fan...

USD experienced an observable drop

Compounding the effect was a slip in retail sales fell continuing last month’s trend. Estimates gauge the possibility of another rate hike at under 50%., of course this is a disparate position from FOMC’s plan to commit 4 increases by 2018...

Fundamental Analysis - USD, EUR, JPY, GBP

The currency strengthened opposite the JPY and EUR, but slipped opposite AUD and GBP. Janet Yellen head of the FRS went on record in front of Congress pointing out the US economy’s positive trend which in turn will affect the Fed’s interest rate stance...


USD, EUR Woes and Safe Havens see a Boost

The US Dollar floundered against most other FOREX currencies yesterday. The only currency that fared worse than the dollar (resulted in the USD strengthening against it) was the EUR...

Yen Gains After Abe Setback

This week, the dollar is starting off on a strong note as US interest rates continue their increase from Friday. For example, 10-year yields...

Technical Analysis: Gold

Our four-hour chart is showing Tenkan-sen under the Kijun-sen, both while being horizontal. Chikou Span confirmative line bisects the chart from below, indicating a descending cloud reversing into ascension. XAU seems to be trading over both the Tenkan-sen and Kijun-sen...


Daily Fundamental Analysis

Mario Draghi shook up markets on Tuesday by announcing victory against deflation and stating that policy needs to gradually normalize...

Fundamental Analysis for Majors

It seems that investors confidence in commodity currencies were renewed as their prices grew while the safe-havens...

Technical Analysis DAX & AUD/JPY

The four-hour chart above clearly shows the Tenkan-sen line crossing the Kijun-sen from the bottom of the chart, we also see the blue line moving downwards, while the red is holding horizontally. The Chikou Span confirmative line is moving towards the bottom of the chart, indicating a descending cloud...

  


Share: