HotForex Forex News

05:17 PBOC: Will provide financial support to help manufacturing upgrade

The Chinese central bank (PBOC) came out with the headlines last minutes, making a strong case to provide support to the manufacturing sector.

Key Headlines via Reuters:

Will provide financial support to help manufacturing upgrade and transition

Will support securitisation of credit assets in the manufacturing sector

Will increase scope for insurance firms to invest in manufacturing sector

Will support increased provision of credit to manufacturing sector by financial organisations

05:10 Japans Aso: Speculative movements a trend in FX market

Reuters reports comments from the Japanese finance minister Taro Aso, who crossed the wires earlier on the day.

Key Points:

No comment on FX levels

Speculative movements a trend in FX market

US administration will be disorderly until staffing sorted out

05:06 EUR/USD: Corrective slide stalls near 1.0850, 1.09 back on sight?

The overnight retreat in EUR/USD stalled just ahead of the mid-point of 1.08 handle, as the bulls look to regain control amid faltering recovery in the greenback versus its main peers, in response to  Dallas Fed president Kaplan’s remarks. Fed’s Kaplan: Fed would be wise to move gradually and patiently

Moreover, markets sold-off the US dollar once again on the latest Trump headlines, citing that the “Trump administration is looking at driving tax reform and infrastructure concurrently,” raised renewed concerns over the effectiveness of the Trump’s government, especially after last week’s Healthcare Bill failure. The USD index met fresh sellers near 99.10, reverting to 99 handle, shaving-off minor-gains.

However, it remains to be seen if the spot manages to regain 1.09 handle as the shorter-duration treasury yields, which mimics short-term Fed’s interest rates outlook, outperforms, while recovery in the Asian equities could also cap further upside in EUR/USD.

Calendar-wise, we have a data-empty EUR docket and hence, focus remains on the US CB consumer confidence data and regional manufacturing index due later in the NA session. Besides, FOMC member Kaplan will hit the wires once again later today.

EUR/USD Technical Levels   

Valeria Bednarik, Chief Analyst at FXStreet explains, “The 4 hours chart for the EUR/USD pair shows that the price is well above the 1.0820/30 region, the 50% retracement of the post-US election's decline and former yearly high, while the 20 SMA keeps advancing below it. Technical indicators in the mentioned chart have lost upward strength, pulling modestly lower within overall readings, not enough to suggest further declines ahead. Buying interest is likely waiting in the mentioned 1.0820/30 region, although a break below it could result in a slide down to 1.0790, where the pair will fill the weekly opening gap. Support levels: 1.0765 1.0730 1.0700 Resistance levels: 1.0830 1.0870 1.0910s.”


04:58 GBP/USD closed at more than one month high

GBP/USD closed at 1.2557 on Monday; the highest closing level since Feb 23 largely on the back of a broad based US dollar selling.

Blessing in disguise

The dollar selling appears to have come to a halt as the markets realize Trump’s failure to repeal the Obamacare is a blessing in disguise. Experts say Obamacare was bad, but Trumpcare would have been worst. The fact that it received no support suggests there are checks and balances in Washington. What it means is the low odds of Trump starting a trade war with China. 

Focus on Yellen

Yellen is scheduled to speak later today. The central bank chief may express concerns regarding the Trump’s ability to deliver tax cuts, although the wording is likely to be very soft. Dollar selling may resume if Yellen in any way suggests slower Fed rate hikes this year.

GBP/USD Technical Levels

The spot was last seen trading around 1.2567. A break above 1.2569 (Feb 24 high) would open doors for 1.26 (zero figure) and 1.2615 (previous day’s high). On the other hand, a breakdown of support at 1.2555 (session low) could yield a sell-off) to 1.2484 (previous day’s low) and 1.2469 (Thursday’s low).


04:47 Feds Kaplan: Fed would be wise to move gradually and patiently

More comments hit the wires from Dallas Fed president Kaplan last hour, during his speech  at a panel discussion titled "A Discussion of Economic Conditions and the Role of Monetary Policy," at Texas A&M University.


Inflation continue to move towards 2%

See nail-biting whether OPEC sticks to its deal

‘China has dramatic overcapacity’

Entitlement reform must be on the table

Fed would be wise to move gradually and patiently

Confidence in meeting dual mandate

Fed might tailor its balance sheet strategy to each type of security

04:40 Japans Ishihara: Closely watching market moves

Japanese economy minister Ishihara crossed the wires last hour, via Reuters, noting that Japan’s government is closely watching market moves.

This comes after the recent strength in the yen, and jawboning by the Japanese authorities cannot be ruled out.

04:16 PBOC sets the Yuan reference rate at 6.8782

The People's Bank of China (PBOC) set the Yuan reference rate at 6.8782 this Tuesday morning, compared to Monday's fix of 6.8701.

As per LiveSquawk report, the central bank would not be conducting Open Market Operations (OMO) today. 

04:01 AUD/JPY is back above weekly 100-MA

The overnight recovery in the AUD/JPY cross is being extended this Tuesday morning in Asia, with the pair trading above the weekly 100-MA level of 84.48.

Chart driven recovery

The recovery from 83.90 to 84.55 appears largely due to the oversold nature of the RSI indicator on the 1-hour and 4-hour time frame. However, on a larger time frame - daily chart, the RSI is still sloping downwards and yet to hit the oversold territory.

Moreover, despite the recovery in the AUD/JPY (a risk barometer), the S&P 500 futures are trading dead flat, suggesting the pair is witnessing a chart driven recovery. The stock markets across Europe and in the US could be in for a technical correction/sideways action, although it remains to be seen if the pair continues its technical recovery on reverses course as the day progresses.

AUD/JPY Technical Levels

A break above 84.75 (2.63% of 87.485-83.899) would expose 85.00 (zero figure) and 85.20 (Jan 31 low). On the other hand, a breakdown of support at 84.188 (session low) could yield a pullback to 83.899 (previous day’s low) and  83.744 (Dec 29 low).


03:58 USD/CNY fix projection: 6.8851 - Nomura

Analysts at Nomura offered their model for today's USD/CNY fix.

Key Quotes:

"Our model1 projects the fix to be 150 pips higher than the previous fix (6.8851 from 6.8701) and 87 pips higher than the previous official spot USD/CNY close of 6.8764. The basket implied change is 104 pips higher than the previous official spot USD/CNY close (6.8868 from 6.8764)."

03:34 USD/JPY: eyes for 111 handle albeit recovery capped by 110.80 resistance

Currently, USD/JPY is trading at 110.72, up 0.05% on the day, having posted a daily high at 110.84 and low at 110.56.

Wall Street drops amid raising concerns over Trump's agenda

USD/JPY is soft in the Tokyo open and the dollar's come back rally overnight has stalled. The greenback was recovering from the sell-off post healthcare bill failings and markets were clutching at straws when some of the GOP were suggesting a more accommodative attitude towards the looming tax reforms. USD/JPY made a double bottom at 110.10 and subsequently moved up to 1110.60, paused and climbed higher to meet the 110.80 resistance. 

Trump wants to package tax reform and infrastructure deal

"The 10-year note yield fell to 2.36% before recovering modestly to end the day in the red anyway at 2.38%," explained Valeria Bednarik, chief analyst at FXStreet, adding, "the yield of the two-year note traded as low as 1.236%, before also recovering modestly. Nevertheless, the pair is intrinsically bearish, now trading below the previous yearly low of 110.62, the immediate resistance."

USD/JPY levels

USD/JPY bounced from the 200-week ma lies at 110.11 earlier, but a sell-off back down to challenge this area opens up the potential for a run towards the 55-week ma at 108.55.  "Rallies will find initial resistance at 113.50/63 but only above 115.62, would we look for a challenge to the key short-term resistance offered by the 16 month resistance line at 117.55," argued analysts at Commezbank. 

03:25 Trump wants to package tax reform and infrastructure deal

LiveSquawk report citing stating the “Trump administration is looking at driving tax reform and infrastructure concurrently.” 

Infrastructure plan was to be kept until next year, but the Trump administration decided to club it with tax plans mainly due to last week’s healthcare debacle. 

Trump needs fast victories and infrastructure spending is something that would get support from Democrats and hardliners as well. 

03:10 Feds Kaplan sees no systemic risk from stock market valuations

Fed’s Kaplan was back on the wires stating there is no systemic risk from the stock market valuations.

Key quotes

Fed might tailor its balance sheet strategy to each type of security

When time comes to trim the balance sheet, would trim both MBS and Treasuries

Making slow gradual growth progress toward inflation goal

Fed’s neutral rate is around 2.75%.

02:57 Equities full of optimism - ANZ

Analysts at ANZ explained, that as the saying goes, it’s tough to keep a good thing down.

Key Quotes:

"Namely US equities which continue to anticipate a more regulatory friendly environment and increased fiscal spending to drive higher earning’s growth. Time will tell with a lot of optimism priced in, but there being little concrete evidence yet. In the confidence stakes, there will be another reading on how US consumers are going tonight."

"The Fed has recently pointed to high levels of business and consumer optimism as encouraging signs about the outlook for growth, but there needs to be signs this sentiment is translating into higher spending. In this regard, the consumer confidence data tonight is important."

"Conference Board consumer confidence for March is expected to ease slightly to 113.5 vs 114.8, which was a post GFC high and would imply that consumers remain really quite confident."

"However, personal income and expenditure data released later in the week is expected to show consumption is not running away despite the high level of consumer confidence. Personal income and expenditure are seen at 0.4% m/m and 0.2% m/m respectively." 

02:41 NZD/USD: bird resilient on 0.70 handle to dollar s come back attempts

Currently, NZD/USD is trading at 0.7047, up 0.04% on the day, having posted a daily high at 0.7051 and low at 0.7043.

NZD/USD has been consolidating the recent action in the greenback on the back of the healthcare bill failings by the GOP. There was some renewed optimism that markets jumped on overnight on Wall Street in respect to the possibility of tax cuts being fast tracked on the GOP's agenda, but overall, uncertainty is rife. The greenback and stocks made back some ground on recovery attempts but the bird only gave back 30 pips or so. 

Forex today: dollar fights back, Wall Street buying GOP's tax reforms noise

Meanwhile, with the RBNZ well and truly sidelined (confirmed by last week’s OCR Review Statement) and economic news minor until the mid-April CPI release, analysts at Westpac predict that the NZD/USD is likely to be mainly a reflection of US dollar behaviour."

Wall Street drops amid raising concerns over Trump's agenda

3 months ahead: 

On a medium term view, the analysts at Westpac suggested that against a backdrop of large oscillations in NZD/USD during the past six months, we err on the side of negativity for the next few months. "Our main rationale remains our expectation the US dollar will resume its trend higher amid a tighter Fed and stronger US economy. We target 0.6900."

NZD/USD levels

NZD/USD's key first support is at 0.7034 the 50 sma on the hourly guarding 0.7000/16. The next downside levels are 0.6950/60 and key supporting areas guarding 0.6880 and March lows. On the upside, a drive higher targets the double-bottom of potential resistance at 0.7130 on the 4hr chart in mid-Feb and late Fed business. 0.7245 comes as the late Jan/early Feb support and double top resistance Feb 16th and 23rd. 

02:30 Federal Reserve Kaplan is hitting the wires: U.S. GDP will be 2.25pct

Federal Reserve Kaplan is hitting the wires.

Quotes so far as per Retuters as follows:

  • Kaplan repeats his view that the U.S. GDP Growth this year will be 2.25PCT, still good enough to take slack from labor market.
  • Kaplan says optimism among businesses, prospects of regulatory reforms could provide upside to growth forecast.

01:34 Market overview: US tax cuts on the cards? - ANZ

Analysts at ANZ offered a snapshot of the markets.

Key Quotes:

"Markets reacted as you would have expected them to in the aftermath of last week’s decision by Donald Trump to pull proposed reforms and repeal of Obamacare. The dollar weakened, fixed income rallied (yields fell) and stocks declined. However, the moves were relatively muted and US stocks retraced much of their losses by the time of writing whilst Treasury yields were off their lows and the dollar stabilized."

"Whilst a blow for Donald Trump for now, repeal of Obamacare will resurface in time whilst the focus on securing middle class tax cuts and the rollback of other regulation is likely to intensify. That expectation helped to stabilize markets. At the time of writing, the S&P 500 was off 0.1%, the yield on the US 10-yr note was at 2.37% (-4bps) and the DXY was off 0.5% from Friday’s close. European bourses underperformed with the DAX and FTSE 100 down 0.6%. The CAC 40 was off 0.1%. Oil remained weak as supply concerns continued to weigh on price."

01:25 Fed s Kaplan at Texas A&M University - Live Speech

The Federal Reserve Bank of Dallas' President Robert Kaplan is expected to participate in a panel discussion called "A Discussion of Economic Conditions and the Role of Monetary Policy," at Texas A&M University in College Station, Texas, due at 22:30 GMT.

Who is Robert Kaplan?

Robert Steven Kaplan has served as the thirteenth president and CEO of the Federal Reserve Bank of Dallas since September 8, 2015. He represents the Eleventh Federal Reserve District on the Federal Open Market Committee in the formulation of U.S. monetary policy and oversees the 1,200 employees of the Dallas Fed.

01:10 US data coming up - Nomura

Analysts at Nomura offered a preview of the forthcoming US data.

Key Quotes:

"Advance goods trade balance: The goods trade balance was -$68.8bn in January, a wider deficit than in December, driven by soft goods exports and a steady increase in imports. In February, container data at ports suggest imports may have pulled back after many months of increase while exports increased steadily. Thus, we expect goods trade balance of -$65.1bn, slight narrowing of the deficit from January (Consensus: -$66.4bn). 

Case-Shiller home price index: Home prices in urban areas increased 0.93% m-o-m in December. The annual pace picked up notably, registering 5.58% y-o-y, following an uptick in November. Firm consumer fundamentals for the housing market, coupled with lean supply of housing units, likely continued to exert upward pressure on housing prices in January. However, some of the potential increase may have been due to residual seasonality, which causes relatively rapid increase in the fall/winter months. Consensus expects an increase of 5.60% y-o-y. 

Conference Board’s Consumer Confidence: This consumer confidence index rose further to 114.8 in February from 111.6 in January on improvement in the assessment of future expectations. Incoming data suggest consumer sentiment remained elevated in March. Steady pace of job creation and gains in equity markets may have contributed to continued optimism. Moreover, the preliminary report of the Michigan survey indicates that consumer sentiment in March improved slightly in March on a pick-up in consumers’ assessment of current conditions. Thus, we expect the consumer confidence index to have remained elevated at 115.0 in March (Consensus: 114.0)."

01:04 AUD/USD: risk towards 0.7800 on the cards?

Currently, AUD/USD is trading at 0.7613, down -0.05% on the day, having posted a daily high at 0.7620 and low at 0.7613.

AUD/USD has been consolidated within a 40 pip range and has remained robust vs the dollar's attempts of a comeback overnight. In the absence of a catalyst, the market continued to weigh up the risks associated with the GOP's inability to agree in the healthcare bill and what those implications are for fiscal policy markets had priced into the dollar. 

Wall Street drops amid raising concerns over Trump's agenda

For the day ahead the RBA’s Debelle gives a speech on the global FX code of conduct in Sydney. The rest of the week has a number Fed speakers which may offer a catalyst one way or another for the greenback. Meanwhile, the week-old downward correction persists, the 0.7600 area still vulnerable according to analysts at Westpac.

AUD/USD 1-3 month: 

Imre Speizer, analyst at Westpac suggested that AUD/USD is at risk of testing 0.7800 during the next few weeks as USD longs are pared:

"Longer term we expect to see it slightly lower to around 0.7600. A steady hand from the Fed in June plus an optimistic RBA should limit downside on AUD/USD during the next few months. Further out, though, the underlying AUD trend should be gently lower, as growing bulk commodity supply gradually cools the 2016 price surge. Iron ore should be back under $80/tonne by June, with further (modest) declines likely in H2 2017. (21 March)."

Forex today: dollar fights back, Wall Street buying GOP's tax reforms noise

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that the technical picture is neutral-to-bearish:

"The price remained below a bearish 20 SMA, while technical indicators retreated within bearish territory after testing their mid-lines, now lacking directional strength, indicating no buying interest around the Aussie. Still the pair can recover some ground, particularly if risk aversion continues easing during the upcoming Asian session, although gains beyond 0.7700 are not likely. A break below 0.7600, on the other hand, should favor additional declines towards the 0.7520/40 price zone."

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Data source: FX Street
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