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Dean's Daily FX Update – 06 March 2017
The Fed seemed to be on a mission this week to illustrate that they were considering hiking interest rates mid-March, this meant the market come to a grinding halt on Friday as the market waited on the press conference from Fed Chair Yellen. She did not disappoint and although she reiterated the Fed are still data dependent, she could not do more to assure the market that come March 15, the FOMC will hike rates.
This was the confirmation that the market needed, and if ever you wanted to see a “buy the rumour, sell the fact,” trade – this was it. The greenback did a lot of work the last week, to put it into perspective, this time last week there was a 30% chance of a rate hike – this week those odds are sitting at 94%. The USD crumbled after the speech and I suspect that we may see something similar on Sunday evening in the Asian Pacific session as traders take profits.
The odd one out was the EUR, the EURUSD pushed through resistance and actually finished the week in positive territory as fresh legal worries for the Le Pen triggered a short squeeze. I am not sure how much of this politicking, but it reiterates for me my fear of trading this pair. From a technical analysis it seems as though the EUR found resistance a major line in the sand of 1.0630, this will be pivotal next week, a candle close above this level and we could open up to another test of 1.0700, more resistance means 1.0520 is back in play.
Cable is suffering from something similar and the market is still too aware of the Brexit repercussions, both from the EU and closer to home in the form of Scotland wanting to leave the UK. GBPUSD did manage to bounce from 1.2200 and close at around 1.2290 on Friday, this has been recent support/resistance and early direction will be key. The pair does look likely to continue this rally, but there are too many fundamental aspects in play for me.
The USDJPY has been trading like a vicious roller coaster of late, with rate hike expectations rising, so did the JPY. The pair traded as high as 114.75 before retreating to 113.80 on Friday, that is a solid effort but considering the pair started the week at 111.50 it really is not huge. I am looking for this pair to test 113.00 again before we see another bounce.
The USD had its best run of the year against the commodity currencies as it ate into both gold and oil this week, it started retracing in all pairs on Friday as the commodity pairs rallied. As with the rest of the major pairs, I suspect that the NZD and CAD will both continue their rallies which started on Friday. The AUD is a little tougher to read as it has a lot of event risk to contemplate this week.
Considering Yellens comments on Friday night, the non-farm payroll data becomes HUGE this coming Friday. What kind of reading would leave the rates on hold? Probably around 50K, while this is highly improbable we did see something this terrible a couple of months ago. Yellen has without a doubt stoked much optimism, and I think the market will now start shifting their attention to future meetings.
Let’s first deal with next week before we look forward – but it’s hard to ignore the fact that, “it’s about to get interesting.”
Daily Ranges 06/03/2017
Majors
EURUSD
Resistance 1.0600 – 1.0620
Support 1.0520 – 1.0490
GBPUSD
Resistance 1.2300 – 1.2320
Support 1.2230 – 1.2210
AUDUSD
Resistance 0.7590 – 0.7620
Support 0.7540 – 0.7510
NZDUSD
Resistance 0.7060 – 0.7080
Support 0.7010 – 0.7000
USDCAD
Resistance 1.3400 – 1.3415
Support 1.3350 – 1.3330
USDJPY
Resistance 114.40 – 114.70
Support 113.60 – 113.20
USDCHF
Resistance 1.0130 – 1.0150
Support 1.0090 – 1.0070
Rand
USDZAR
Resistance 13.1225 – 13.1750
Support 13.0260 – 13.0000
EURZAR
Resistance 13.8580 – 13.8750
Support 13.7530 – 13.7140
GBPZAR
Resistance 16.1250 – 16.1570
Support 15.9730 – 15.9480
Minors
AUDCAD
Resistance 1.0170 – 1.0200
Support 1.0100 – 1.0070
AUDJPY
Resistance 86.70 – 87.00
Support 86.20 – 86.00
EURCHF
Resistance 1.0690 – 1.0710
Support 1.0650 – 1.0630
EURGBP
Resistance 0.8630 – 0.8660
Support 0.8570 – 0.8550
EURJPY
Resistance 120.80 – 121.00
Support 120.10 – 119.80
GBPJPY
Resistance 140.50 – 140.70
Support 139.60 – 139.30
GBPCAD
Resistance 1.6450 – 1.6480
Support 1.6360 – 1.6330
GBPCHF
Resistance 1.2425 – 1.2450
Support 1.2365 – 1.2330
Indices
DE30
Resistance 12100 – 12150
Support 11970 – 11950
UK100
Resistance 7390 – 7410
Support 7320 – 7300
US500
Resistance 2400 – 2450
Support 2370 – 2350
US30
Resistance 21150 – 21200
Support 20950 – 20900
SA40
Resistance 44800 – 45000
Support 44200 – 44000
Commodities
BRENT
Resistance 55.90 – 56.00
Support 55.00 – 54.80
XAUUSD
Resistance 1254.00 – 1250.00
Support 1225.00 – 1215.00
XAGUSD
Resistance 18.00 – 18.10
Support 17.70 – 17.30
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