The Waiting Game

The Waiting Game

With little news overnight, what moves we saw could be attributed to pre-FOMC positioning. But let’s not forget the New York markets are bracing from Winter Storm Stella which is anticipated to dump anywhere between 15-20 inches as it blasts up the east coast, stranding thousands of travellers including German Chancellor Merkel, whose meeting with President Trump has been rescheduled to March 17. Markets are in a holding pattern overnight ahead of the heavy docket of Macro events later this week (i.e., Fed/BoJ /BoE / Dutch elections).

Australian Dollar

The Australian dollar was full of vim after the downward momentum started to fade late last week. And while the US payrolls failed to live up to the market’s lofty expectations, the AUD had a modest retracement higher on sagging USD appetite. However, I suspect the move was assisted by the EURAUD coming back to earth as the market weighs  it’s overall Euro risk appetite. US equities moved slightly higher led by an outperformance in metal and mining stocks after the underlying commodities had a good rally yesterday. Meanwhile, all eyes will be on the China Data dump, as the markets expect industrial production, fixed-asset investment and retail sales to have risen by 6.2%, 8.3%, and 10.6% respectively.

On the domestic front, Australia February NAB confidence has come slightly lower at seven versus ten prior. The business conditions are also more moderate at nine versus 16 prior. AUDUSD momentum has sagged but has held the critical .7550 level ahead of the Chinese Data

 

Euro

A minor inflexion point as traders mull over the prospects of their latest sweetheart trade, EUR and JPY crosses, to power on as price action through this full slate of Central Bank events will clearly indicate if we’re at the nub of a trend or will the market fall back to USD exclusive mode again. Not lots of information overnight, but one senses some friction amongst the ECB sitting hawks and doves. The doves carried the tone in the statement, but Draghi’s press conference was a touch on the hawkish side. How much the Euro trade remains in vogue will be dictated by just how hawkish the Fed will tilt later in the week. On the flip side, one has to wonder why the Euro vols are looking too cheap for potential risk events that could be as large as Brexit, we know Le Pen is behind in the polls, but given recent history, it might too soon to count out the “ silent majority.”

Japanese Yen

Positioning will dominate USDJPY pre -FOMC as the markets ping pong back and forth tracking the session high and low on the US 10 year treasuries.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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