08.03.2017 Daily Market Analysis

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The date is March 15, when the FOMC meets, but the major piece of macroeconomic data to watch out for is Friday’s Nonfarm payrolls data. If the labor market continues to impress, it would be a ‘done deal’ for the Fed, and a rate hike would be all but confirmed on Friday. There was medium impact data released from the US, as Trade Balance printed -48.5B, slightly weaker than the expThe US dollar (USD) continued to pile pressure on all the major currencies on Tuesday, edging higher as investors continue to price in a rate hike next week.

ected 47.0B. Other mild data also came out negative, as month on month Consumer Credit printed 8.8B, worse than the expected 19.1B; while IBD/TIPP Economic Optimism printed 55.3, also weaker than the expected 57.1. Today, investors will have a glimpse of ADP Nonfarm payrolls estimates as well as the latest Crude Oil Inventories.

Meanwhile, the euro (EUR) edged lower yesterday, with no data released to provide major directional clues. Revised Eurozone quarter on quarter GDP came in as expected at 0.4%, while month on month German Factory Orders printed -7.4%, worse than the expected -2.5%. There was no major political headline, but France remains a key issue for the common currency. There is no major macroeconomic data expected out of Eurozone today, with the euro set to take its cue from the USD proceedings.

The British pound (GBP) continued its tumble against the greenback, with Brexit the major catalyst. The Brexit bill failed to pass through the House of Lords for the second time yesterday, and investors are worried Prime Minister May might fail to trigger Article 50 this month. While the Brexit process will not end, such minor setbacks would weigh down on the GBP. Today, pound traders will watch out for the Annual Budget Release by Treasury. An upbeat assessment may well yet be undermined by another set of negative Brexit headlines.

All commodity currencies were pressured by the USD, with the New Zealand dollar (NZD) leading the losses. The NZD was weighed down by soft data as the Global Dairy Trade Price index came in at -6.3%, lower than the previous -3.2%. The negative slide in prices does not bode well for the overall economy. The Australian ticked higher in early trading sessions, but ended the day well pressured by the greenback. No major data came out of Australia, but soft Chinese Trade Balance figures weighed down on the Aussie. China reported a Trade Balance of -60B, worse than the expected 173B. On the other hand, positive data failed to inspire the Canadian dollar (CAD). Canadian Trade Balance printed 0.8B, better than the expected 0.2B, but the loonie took its cue from the falling crude oil prices. Today, Canada will release month on month Building Permits numbers as well as labor data.