Daily Market Reviews

Economic Calendar for March 23, 2017

Time (GMT) Currency Event Previous Forecast
09:00 EUR ECB Economic Bulletin
09:30 GBP Retail Sales m/m -0.3% 0.4%
12:30 USD Unemployment Claims 241K 240K
12:45 USD Fed Chair Yellen Speaks
14:00 USD New Home Sales 555K 566K

 

Global Market Overview

The Euro weakened broadly against rivals on Wednesday.  The Pound was mostly stronger as traders chose to put aside their concerns over the Brexit for the day.  The USD was mixed, but stronger than in recent sessions.  The Yen continued to strengthen broadly as global uncertainties had traders continuing to move into the safe haven currency.  Gold gained for the fifth consecutive session on Wednesday, heading modestly higher as risk appetite remains low among investors.  Crude edged lower after the U.S. Energy Information Agency reported another gain for crude inventory levels, although losses were muted by a surprise drop in gasoline inventory levels.

Daily Currency Pair Analysis

EUR/USD – The pair rose early in the session, but traders found too much resistance above the 1.0800 level and the pair dropped back.  After trading nearly down to the 1.0750 level the pair did rebound, but there was still resistance at the 1.0800 level and the pair closed the session just shy of that resistance.  We are fairly certain that the pair won’t trade up through the resistance at the 1.0800 level and should instead find itself heading lower, especially with the USD beginning to regain its footing on Wednesday.  The pair could also find support at the 1.0700 level, which would lead to a fairly tight trading range for the pair heading forward.

USD/JPY – The pair traded lower for the seventh session in a row on Wednesday as global risk aversion keeps traders moving into the safe haven Yen.  There was a drop below the 111.00 level intraday, but by the close the pair had found support and rebounded back above that 111.00 level.  While the pair did close back above the 111.00 level, it was well below the support at the 111.50 level and we think that could be forecast significantly lower levels for the pair.  The Trump administration has already voiced its desire for a weaker USD, and it looks as if it is going to get that as the global uncertainties continue to strengthen the Yen, while the USD struggles under concerns over fiscal and monetary policy in the U.S.

USD/CAD – The pair tried to gain early in the day, but after trading slightly above the 1.3400 level it hit resistance and dropped back.  The fall took it not only back below the 1.3400 level, but also below its beginning level for the day as it traded lower by the close.  The pair also found support as it reached the 1.3300 level and traded higher from that support.  The USD is beginning to show some signs of recovery right now, and crude remains weak, so we could see another test of the 1.3400 level for resistance in the coming days, with a possibility for the pair to trade above the 1.3400 level in the short term at least.

GBP/USD – The pair was unable to rise above the 1.2500 level on Wednesday, but also found support as it dropped near the 1.2400 level.  By the close the pair was back where it began the day, ending unchanged as traders try to balance the risks of the upcoming Brexit negotiations with the risks posed by the uncertainties surrounding the Trump administration.  This could lead to some choppy trade from the pair in the coming weeks, although the start of Brexit negotiations next week will likely overshadow USD weakness, and could lead to a drop in this pair in the short term.

 

Commodity Update

Gold – Gold was higher for the fifth session in a row Wednesday as risk appetite remained low among investors and the U.S. dollar remained weaker.  At the close gold was just slightly below the $1,250 level, and could find more resistance there tomorrow.  If we get a recovery in the U.S. dollar or increased risk appetite gold is almost certain to break its current winning streak and retreat from the resistance at the $1,250 level.  If it continues higher we should get a move higher to test the $1,275 level for resistance later this month.

Oil – Crude edged lower at the close Wednesday as it remained weak following the U.S. Energy Information Agency’s weekly inventory report, which showed 5 million barrels being added to U.S. inventory levels.  The loss for crude was muted however as the EIA also reported a larger than expected drop in gasoline inventory levels.  Still, crude remains very weak, and more losses can be expected as traders have little hope for falling production levels, and they also continue to worry about the strength of demand for crude.