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Dean's Daily FX Update – 24 April 2017
In the Zone
- EURUSD
- GBPUSD
- AUDUSD
- USDCAD
- USDJPY
- USDZAR
Noteworthy News
- There is talk that North Korea may carry out another ballistic missile test tomorrow. With US forces hovering around the Korean peninsula, this is starting to get a little bit worry some.
Recap
This weekend was always billed as a big one for the EU, after the populism votes of last year’s elections there was the fear that the French election may go the same way which would be arguably catastrophic for the region. Contrary to voting last year the polls got this election spot on – so far anyway. Le Pen and Macron will now go into run-off election on May 7th to decide the Presidential race, the polls did predict this and they also predicted Macron to win this run-off and so we are seeing the money move in this direction. I am still a little dubious as we saw what happened last year and the risk is that the market counts their chickens before they hatch.
Saying this, as predicted we have seen an early relief rally in the Asian Pacific markets with the EUR pairs all opening the market with a gap open, and the risk pairs like JPY, AUD and Gold have also opened with some sizeable gaps. The European indices will open this morning with some sizeable gap opens, there may be some opportunity brewing in these pairs as market theory suggests these gaps should close – I am going to wait for London to open before I get too excited.
The EURUSD moved higher in excess of 200 pips this morning, there may be some extension to that move on the London open. From a technical level, this pair did open the market near 1.0920 which is where this pair was trading prior to the US election in November 2016. I suspect that there will be some form of retracement today, timing may be paramount though.
Both the AUD and NZD opened with some nice gaps also, for the most part though both have closed those gaps already and so I would be careful in these pairs today. Both markets are on a bank holiday tomorrow and so these pairs may be suffering from some reduced liquidity already.
The GBPUSD was the loser this morning, it was trading at around 1.2880 on the open but has already given back close on 100 pips. The market rumours are that if Macron were to win, that he and Merkel would make negotiating Brexit quite difficult for the UK. My take on this is that from a technical viewpoint the pair needed to retrace from last week’s move anyways. I also feel that if PM May were to win re-election then she would be in the driver’s seat, any EUR strength against the GBP may be short lived.
The USDJPY was the big gainer this morning, last week we saw a lot of risk getting priced into the market and this morning we saw the risk environment improve somewhat which meant that there would be some form of sell-off in the JPY crosses. I suspect that that 110.50 could be the first level of resistance to watch out for but today could be a day to let the dust settle in these pairs.
There are no ranges today yet as all the pivots will need to be reset this evening, but once the dust has settled, there will be new ranges in place.
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