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Daily Outlook - Trader Talk
Currency Trading Summary Friday 23-Mar-2018
Written by easyMarkets / APAC Dealing Team
What Happened on Thursday > Top 3?
• Limited momentum in the U.S adding significant weight over the concern of the escalation of a trade war
• Looking ahead for next FOMC meeting, already pricing in 2.5 rate hike in the yield curve
• Bitcoin price found its support in late New York, starting rebound edging up to $8,300
• (USD) odds of a recession are growing, J.P Morgan reiterates the expansionary pressure afoot
• (BTC) Hammer candle in the hourly chart demonstrates the resilient of bitcoin price; consequentially, the bullish outlook is in play
Data & Event Risk Today?
• (EUR) German WPI m/m 06:00 pm AEDT
• (CAD) Manufacturing Sales m/m 11:30 pm AEDT
• (USD) Building Permits 11:30 pm AEDT
Little compensation for Fixed Income market, the CPI of U.S. is in line with the tepid inflation consensus, notwithstanding, the FOMC next week is heavily expected to raise interest rate by 25 basis point. This week, greenback experienced some the bumpy road which has been further exacerbated by the replacement of Rex Tillerson with Pompeo. The determination of stirring a trade war, especially against China reward uncertainty, however, cannot be found in the equity market.
USD JPY: 106.30
Technically, USDJPY is expected to chop higher this week. Just break through 50% retracement of 106.26, turning weekly candle higher. However, a prudent approach is always recommended when it’s the end of the week. 200-d SMA is at 107.36, adding on the equilibrium status of the momentum oscillator, USDJPY has the potential of edging up to a higher level.
EUR USD: 1.2305
From the daily chart, EURUSD looks bid out of writing, but due to a week prospect for the greenback, EURUSD probably can find its bottom for the week. The price section is hovering at around 1.2300 alongside with the 61.8% retracement at 1.2305 proving the magnetic level still hold firmly.
GBP USD: 1.3930
GBPUSD is fairly strong, holding against the up trending dollar and held during US trading hours, above the early low set against the dollar at 1.3921. In fact, the GBP/USD managed to trim most of its daily losses but faltered around 1.4000 and ended up near the mentioned daily low. The pair is still holding on the upper half of the daily ascending channel coming from early March, but with strong selling interest aligned around 1.4000, seems unlikely the pair could break higher.
AUD USD: 0.7885
AUDUSD is fallen sharply in New York Session reaching 0.7795 and close to its low. Risk-seeking and yield- chasing sentiment in the market dragged the commodity bloc lower off guard. Tracing back the descending channel, pushing above that exposes the 61.8% ratio at 0.7974. On the other hand, if prices turn lower, they will have to push below the 38.2% retracement at 0.7874.
NZD USD: 0.7300
NZDUSD is trading at its multi-weeks low following the dollar being lit by a large amount of buying interest on the back of the US Inflation data which mainly were in line with expectations and news regarding Trump ousting the secretary of state. Reserve Bank of New Zealand might say about the data next week at their March monetary policy announcement.
USD CAD: 1.3050
Although the USD is down against most major currencies due to CPI data came in line and dismissal of US Secretary, the pair is on buy-off sentiment due to dovish comments made by BOC Governor Poloz regarding the Canadian economy can sustain further growth without generating inflation. The rally is further supported by falling cruide oil prices. The loonie lost more than 100 pips against USD and reaching towards to the previous high, where the key resistance level lies at 1.3000.
The fear index went upback to above 16.50 level as softer tone came to the equities with risk aversion starting to show up once more. The US equities previous rally was rejected and turning into bearish phase. Risk comes in play however, due to national security adviser was dismissed by Trump.
Gold price went down to below $1320 level as Kudlow the newly appointed by trump as the new White House top economic advisor. He mentioned that he wants to see USD stronger and went so far by giving trade recommendation, without any details. Pushing down further to below $1310 will further increase the sell-off sentiment.
OIL (WTI): $60.75
WTI oil moved higher and holds in $61 zone on Thursday after dipping below to $60.11 low on downbeat US crude stocks data on Wednesday. EIA report showed much stronger than expected build in the inventories with raised concerns about global oil Demand. Increasing Us oil production also keeps oil price pressured.
BITCOIN (BTC): $8,015
The Bitcoin price has endeared further selling on Thursday, seen down over 8%, heading for another week finishing in negative territory. Market bears are showing no mercy across the board, as the trend remains stubbornly to the downside. Bitcoin has been falling at some pace since the double top see at $11,500
Macro Themes in Play
• BOJ Monetary Policy and its Stealth tapering operation is still in play
• Aggressive price reaction around the weakening U.S. greenback after the CPI sell-off
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