17.03.2017 Daily Market Analysis

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After a tough day on Wednesday, following the US Fed Chair’s ambiguous hawkishness, the US dollar (USD) rebounded against the commodity currencies, but remained pressured by European currencies.

The greenback was the recipient of positive data as Housing Starts printed 1.29M, better than the expected 1.26M, and Philadelphia’s Fed Manufacturing Index came in at 32.8, better than the expected 30.2. Unemployment claims came in as expected at 241K, with the only soft data being Building Permits, which printed 1.21M, weaker than the expected 1.26M. Today, USD watchers will focus on month on month Industrial Production numbers as well as the Preliminary University of Michigan Consumer Sentiment data.

In other currency news, the euro (EUR) edged slightly higher against the USD, but terrorist attacks in France curtailed gains that were inspired by upbeat political headlines from Netherlands. There was no major market moving data from the Eurozone, with the final year on year CPI coming out as expected at 2.0%. Italian and Eurozone Trade Balance reports are on tap today, but no major impact is expected on the markets.

Meanwhile, the British pound (GBP) printed extended gains against the USD, thanks to Bank of England’s monetary policy announcement. BOE’s Official Bank Rate remained unchanged at 0.25%, but minutes showed many policymakers believe that a rate hike would be appropriate very soon. There was even one member, Kristen Forbes, who voted for an immediate 25 basis point rate hike. While the market is not expecting a UK rate hike soon, investors are buoyed by the fact that dovish-ness within the camp is diminishing. Today, GBP traders will watch out for BOE’s release of its Quarterly Bulletin.

As stated earlier, all commodity currencies were pressured by the USD. The biggest event for commodity currencies came from China, where interest rates were hiked, but the Australian dollar (AUD) and New Zealand dollar (NZD) were weighed down by soft data. Australia reported its worst employment numbers in almost a year, with the unemployment rate printing 5.9%, worse than the expected 5.7%. The NZD continued to be impacted by weak GDP data, while the Canadian dollar (CAD) drifted lower as Foreign Securities Purchases printed 6.20B, worse than the expected 9.45B. There will be no major market moving data from both Australia and New Zealand today, but Canada will release month on month Manufacturing sales.