Friday March 31, 2017 - 20:31:38 GMT
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Change In Direction For The Dollar?
John M. Bland, MBA
Only Flexible Forex Traders Survive One thing most learn early in their Forex trading career is that the stubborn do not survive. One week ago, the outlook for the USD was looking pretty grim after the Trump Health Care bill effectively went down to defeat. Markets worried that his economic stimulus program could would be in shambles without the savings the new program would produce. One impact from the defeat has been a correction in stock prices and the yield on the 10-yr note has fallen from above the 2.60% level to occasionally below 2.40% to the high 2.30%'s. Nevertheless, the tone of the USD has improved into the end of week period.
The USD tone against the EUR has been variable. Rising Eurozone prices plus a March German Ifo Survey (Monday) which was considerably stronger than expected were fueling a growing perception that the ECB would soon have to start to consider stepping back from excessive policy ease. Most in the markets feel that the negative interest rate scheme in Europe is toxic. However, a press report was apparently leaked Wednesday that ECB policy statements would remain accomodative in coming months. Many of us equate the Eurozone with Germany, but policy must accommodate the weaker economies as well.
As for the JPY, markets were reminded once again on Thursday that based on the rumblings out of the U.S. government, officials are looking for ways to combat official "currency manipulation". The top two currencies on this list are the Chinese yuan and the Japanese yen. Washington clearly would like to see the economic stimulus for the U.S. that a weaker currency could bring. As for the EUR, it would be difficult to target Germany when it is part of a very large currency union with economies of various strengths and weaknesses all under one umbrella.
In the U.K., EU Article 50 was signed late Tuesday by PM May. It was then presented to the EU on Wednesday. The announcement itself was not a surprise to anyone and thus had no special implications. Also a request to the U.K. Parliament for a second Scotland Independence referendum was approved by the Scottish Parliament. This request is not likely to be considered anytime soon, especially while Brexit negotiations are underway.
WEEKLY Forex Economic Calendar:
2 Apr Sun
00:00 AU/NZ Clocks +1 hr
3 Apr Mon
All Day final Mfg PMIs
4 Apr Tue
4:30 AU- RBA Decision
5 Apr Wed
All Day final Service PMIs
12:15 US- ADP Jobs
14:00 US- EIA Crude
6 Apr Thu
All Day final Service PMIs
12:30 US- Weekly Jobless
7 Apr Fri
12:30 US/CA- Employment
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founding partner www.global-view.com
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