Daily Market Reviews

Economic Calendar for April 27, 2017

Time (GMT) Currency Event Previous Forecast
Tentative AUD RBA Gov Lowe Speaks
03:50 JPY Monetary Policy Statement
Tentative JPY BOJ Outlook Report
Tentative JPY BOJ Policy Rate -0.10% -0.10%
06:30 JPY BOJ Press Conference
11:45 EUR Minimum Bid Rate 0.00% 0.00%
12:30 EUR ECB Press Conference
12:30 USD Core Durable Goods Orders m/m 0.5% 0.4%
12:30 USD Unemployment Claims 244K 241K
14:00 USD Pending Home Sales m/m 5.5% -0.6%
23:30 JPY Household Spending y/y -3.8% -0.6%
23:30 JPY Tokyo Core CPI y/y -0.4% -0.2%
23:50 JPY Retail Sales y/y 0.2% 1.6%

 

Global Market Overview

The Euro softened broadly on Wednesday as traders decided it was time to take some profits following the two days of excellent gains for the shared currency.  The Pound is returning to favor among traders and showed it by firming broadly on Wednesday.  The USD finished mixed as it was strong for most of the session, but fell following the announcement of the planned tax reforms in the U.S.  The Yen finished the session mixed as well, with risk appetite falling following the U.S. tax reform announcement.  Gold was lower for the third session in a row Wednesday as a firmer USD and continued risk appetite kept downward pressure on the yellow metal.  Crude gained in response to a larger than expected drop in U.S. inventory levels, but then gave back most of the gains later in the day.

Daily Currency Pair Analysis

EUR/USD – The pair dropped below the 1.0900 level on Wednesday as the U.S. dollar gained strength, but then reversed course and headed higher late in the day, retaking the 1.0900 level.  The pair closed slightly above the 1.0900 level as the USD weakened following the release of the U.S. tax reform plans, which disappointed investors by its lack of details.  The move lower ahead of the tax reform announcement was partially the result of profit taking from traders who decided to take some money off the table after two days of solid moves higher in the pair.  The high point for the pair during the session was near the 1.0950 level, which looks as if it might become the new resistance level for the pair, with the 1.0800 level as the logical support level for the pair.

USD/JPY – The pair rose for much of the session, nearing the 112.00 level, but then declining after the tax reform plans of the Trump administration were underwhelming for markets.  The drop erased all of the days’ gains and a bit more as well, with the pair closing the session below the 111.00 level.  There have also been concerns over President Trump signing an executive order that would take the U.S. out of NAFTA, which will surely be of interest to Japanese traders when they return as they speculate what change in trade plans President Trump might have for Japan.

USD/CAD – The pair headed above the 1.3600 level on Wednesday, holding onto its gains as traders speculated on the impact of increased tariffs on Canadian lumber exports to the U.S., as well as news that President Trump is looking to abolish the NAFTA treaty, which could significantly impact trade relations between Canada and the U.S.  Obviously from the gain in the pair a U.S. withdrawal from the NAFTA agreement would not benefit Canada in the opinion of currency traders.  This looming event could keep upward pressure on this pair for some time, especially as crude struggles to get back above the $50 a barrel level, and could even drop substantially if OPEC decides not to continue its production cuts when it meets next month.

GBP/USD – The pair dropped early in the session, but later recovered and headed modestly higher for the day.  The gains halted around the 1.2850 level as the pair has fond resistance there and struggles to get past that level.  There is a chance that we will see further gains tomorrow however as traders bullishness over the British currency appears to be returning, and the lack of detail surrounding the U.S. tax reform plans has cast some bearish sentiment over the U.S. dollar.  This could finally be the setup the pair needs to head up and test the 1.3000 level, although we don’t believe it will have the strength to get beyond that handle at this time.

 

Commodity Update

Gold – Gold fell again on Wednesday as risk appetite remained high in markets, and the U.S. dollar firmed against rivals.  Both situations put downward pressure on gold, which has been falling steadily following the drop in global geopolitical risks.  There was a bounce in electronic trade as U.S. President Trump unveiled his tax reform plan Wednesday afternoon, but the consensus is that the tax plan would be negative for gold, so we should expect to see further declines when markets reopen on Thursday.

Oil – Crude rose above the $50 a barrel level on Wednesday after the U.S. reported a greater than expected decline in weekly crude inventory levels.  Analysts had been expecting a 1.9 million barrel drawdown, so traders were surprised by the reported 3.6 million barrel drawdown in crude inventories.  The news was later offset by rising gasoline and distillate inventory levels, causing crude to give up most of the early gains and finish the session with a small gain.