WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

US FX Market Open – Wednesday, March 1, 2017: Market on March 15 alert after Fed rhetoric

Posted by Marge Maresca on Mar 1, 2017 7:35:10 AM

b ullbear.png

Overnight Events

• EUR/USD -0.4%, USD/JPY +0.8%, GBP/USD -0.1%, DXY +0.7%         
• DAX +1.4%, CAC +1.45%, Brent +0.5%, Gold -0.2%, Copper +1.7%
• Dollar Index hits 7-week high at 101.78. +0.7%
• Dollar surges as Fed speakers raise hopes of March hike - Rtrs
• EZ Feb Markit Mfg final PMI 55.4 vs prev 55.5. 55.5 f/c
• German state CPIs quite a way above last month's y/y reads
• DE Feb adjusted jobless total falls by 14,000 to 2.592mln in Feb
• GB Feb Nationwide house prices 0.6% m/m, 4.5% y/y. 0.2%/4.0% f/c
• GB Jan BOE consumer credit +1.416bln vs prev +0.984bln rvsd. 1.2bln f/c
• GB Jan Mortgage lending +3.379bln vs prev +3.693bln rvsd. 3.7bln f/c
• GB Jan Mortgage approvals 69.928k vs prev 68.266k rvsd. 68.650k f/c
• GB Jan M4 money supply +0.9% vs prev -0.5%
• GB Feb Markit/CIP Mfg PMI 54.6 vs prev 55.9. 55.6 f/c
• Swiss Jan UBS consumption indicator 1.43 vs prev 1.38 (rvsd)
• Swiss Feb Manufacturing PMI 57.8 vs prev 54.6. 55.6 f/c
• Swedish c.bankers divided over rate path - minutes - Rtrs

Currency Summaries

EUR/USD
• Modest EUR/USD drop follows heightened spec of March Fed hike
• EUR/USD 1.0560-1.0526 range after 1.0538-1.0590 Asia
• Stops below 1.0500 out of reach as real money surface on the bid
• Corps/option acc buyers, plus some speculative bargain hunting reported
• Techs once again more bearish but momentum again lacking
• Rate divergence clearly saying down: http://reut.rs/2m6nypC
• Eyes to Fed dove Brainard today. Kaplan (hike sooner advocate) also speaks

USD/JPY
• Failed ahead of 2017 111.69 low on Tue hitting 113.84 so far this session
• Has pierced back within 113.22-114.82 daily cloud, but supply will hurt bulls
• Pivot level comes in @113.67 has been broken, expect more offers at 114.00
• Intra-day bulls seek an hourly close above the 113.67 pivot
• Nikkei up 1.44%. Nikkei futures 48/72H correlation with USD/JPY +0.64/+0.67
• EUR/JPY sees a 119.28-119.93 range

USD/CHF
• USD/CHF off its best but the bulls have the advantage
• Spot hit a 1.0107 high in European AM as bulls target last wk's 1.0141 peak
• Dollar driven by higher prospects of a Fed rate hike in March
• EUR/CHF down again after reversing Monday's rally. 1.0637 low today
• Remains an offered market but SNB support ahead of 1.0623 Brexit low
• More positive CH data: manufacturing PMI highest since April 2011

GBP/USD
• GBP/USD has tripped stops below 1.2350 en route to 1.2323
• 1.2323 = 6wk low. 1.2350 was early Ldn low, ensuing high 1.2387
• 1.2387 notched before softer than expected UK mfg PMI
• Foreign investors sold net GBP 7.591bln gilts in Jan, most since Mar 2014
• EUR/GBP rose to threaten 0.8549 after cable broke below 1.2350
• 0.8549 was Tuesday’s high after month-end buying

USD/CAD
• USD/CAD scaled a fresh 5wk peak of 1.3340 during the European am
• Shorts squeezed hard during climb to 1.3340 (1.3325 = Asia high)
• Ascent influenced by increased risk of Fed rate hike March 15
• BoC seen on hold 10am ET, accompanying statement in focus
• 1.3281 (100DMA) is support level. 1.3285 was Asia low

AUD/USD
• AUD/USD elicited fresh support at 0.7637 early Europe before rising to 0.7667
• 0.7637 was Asia low. 0.7700 offers kept lid on pair in Asia
• AUD/NZD tested 1.0763 (Oct high) after extending north early Europe

NZD/USD
• NZD/USD extended south to a 6wk low of 0.7100 in early European trade
• Losses influenced by higher greater risk of Fed rate hike Mar 15
• Wheeler to speak about risks around RBNZ monetary policy setting 3pm ET

Comment

Good news may spur durable Swiss franc rally
Positive economic data may bring about a Swiss franc rally that bad news failed to inspire. The franc has been underpinned by several major risks including uncertainty about the new U.S. administration's policies, China's fight to stem capital outflows, euro zone elections and Brexit. Throughout 2017 though, the SNB has worked to stem CHF appreciation and measured by Swiss sight deposit data, intervention could be to the tune of EUR20 billion. However, a new trend has emerged that the SNB may opt not to fight so hard against--very strong Swiss data. News of a record trade surplus has been followed by a huge leap in Switzerland's leading economic indicator and a big jump in manufacturing PMI. Such economic strength warrants a less accommodative c.bank and a stronger currency. A CHF rally based on strong fundamentals is likely to be more durable than one based on risk aversion. Perhaps EUR/CHF will slip into a lower range closer to 1.03-1.08 from 1.05-1.10.

Today’s events

Option Expirations (Source:ThompsonReuters)

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

• Pre Trump gamma longs rewarded, tho FED speak was catalyst for USD gains
• Pick up in event premium for Yellen Friday and 10 March NFP since
• Short dated vols hold firmer levels – JPY and AUD stand out for now
• EUR/USD lower but still contained so less appetite for vol/gamma there
• French election premiums fading, though EUR puts retain a strong bias  

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:00  DE Feb CPI/HICP – flash, mkt +2.1% y/y for both, prev both +1.9%
• 12:00  MBA Weekly Mortgage Application Indices
• 13:30  Personal Income (Jan) mkt +0.3% m/m, prev +0.3% m/m
• 13:30  Personal Consumption Expenditures (Jan) mkt +0.3% m/m, prev +0.5% m/m
• 13:30  Core PCE Deflator (Jan) mkt +0.2% m/m; prev +0.1% m/m, +1.7% y/y
• 14:00  Dallas Fed Trimmed Mean PCE Price Index (Jan) prev +1.8% y/y
• 14:45  Markit Manufacturing PMI (final Feb) flash 54.3
• 15:00  ISM Manufacturing PMI (Feb) mkt 56.0, prev 56.0
• 15:00  Construction Spending (Jan) mkt +0.6% m/m, prev -0.2% m/m
• 15:30  EIA Weekly Petroleum Status Report
• n/a    Atlanta Fed GDPNow (Q1) prev +2.5% q/q AR
• n/a    Light Vehicle Sales (Feb) mkt 17.70 mn SAAR, prev 17.61 mn SAAR
• n/a    Domestic Passenger Car Sales (Feb) mkt 4.81 mn SAAR, prev 4.67 mn SAAR
• n/a    Domestic Light Truck Sales (Feb) mkt 9.00 mn SAAR, prev 9.22 mn SAAR

Events, Other Releases (GMT) - (Source:ThompsonReuters)

• 15:00  BoC policy announcement, no changes eyed, overnight rate 0.5%
• 16:45  FedTrade operation 30-yr Ginnie Mae (max $1.325 bn)
• 17:30  FRB Dallas's Kaplan on local and national issues; Dallas, TX
• 19:00  Beige Book
• 23:00  Fed Governor Brainard on the economic outlook & monetary policy; Cambridge, MA

 

Topics: US FX Market Open

 

Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

FAQ CenterLEARN MORE >>
Browse our frequently asked questions and find your answers right away.

VideosLEARN MORE >>
Access to the educational lessons, webinars and platform walkthroughs.

READY TO TRY THE MARKETS?

Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!