01.03.2017 Daily Market Analysis

    01.03.2017 Daily Market Analysis



After spending much of the day lower, despite positive Federal Reserve talk, the US dollar (USD) posted significant gains towards the end of the day as President Donald Trump delivered perhaps the most optimistic speech since he took office.

US quarter on quarter Preliminary GDP printed 1.9%, same as the previous, but weaker than the expected 2.1%; while the CB Consumer Confidence came in at 114.8, higher than the expected 111.3. Fed speak continued its positive tone as FOMC voting members, Harker and Dudley, crossed the wires and talked up three rate hikes in 2017. But Trump was the real catalyst of the greenback which soared higher against all the major currencies. Trump’s speech was positive all through, and it confirmed a $1 trillion infrastructural spending plan. Trump also completed the speech without attacking any of US’s major trading partners - a welcome relief for investors. There will be more Fed speak today to look forward to as well as the release of Manufacturing data and the latest Crude Oil inventories.

With the political situation in France now relatively calm, the euro (EUR) was uncharacteristically resilient but it ended the day slightly lower against the USD. There was no major market moving data from the Eurozone, but it will be a busy day for the euro today. Germany will release CPI and Unemployment numbers while Spain, Italy and France will all release Manufacturing PMI data.

In contrast, the British pound (GBP) edged lower against all the major currencies as BOE Deputy Governor-Designate Charlotte Hogg testified on her appointment before the Treasury Select Committee. Hogg’s speech was less optimistic and highlighted various uncertainties regarding the Brexit process. Scotland independence is still heavy for the GBP, but there were no major headlines about it yesterday. Today, Pound traders will watch out for the release of Manufacturing PMI data as well as month on month numbers for Net Lending to Individuals.

All commodity currencies tumbled against the greenback, with the Canadian dollar (CAD) leading the losses. The loonie was weighed down by falling crude oil prices as well as the strength of the USD. There was no major market moving data released from Canada, but today the CAD will be in focus. The Bank of Canada will release its latest Overnight Rate as well as the accompanying Rate Statement. No rate changes are expected, but a hawkish Rate Statement would provide a welcome reprieve for the loonie. Meanwhile, the Australian dollar (AUD) edged lower as gold prices continued to fall; not even upbeat data could lift the Aussie. Quarter on quarter Australian GDP printed 1.1%, better than the expected 0.7%; while Chinese Caixin Manufacturing PMI data came in at 51.7, better than the expected 50.9. The New Zealand dollar (NZD) also drifted lower, but today traders will focus on RBNZ Governor Wheeler who will be crossing the wires from Wellington.