Session close (Wednesday, Feb. 28): Settled at 1.2217, down 36 ticks
Fundamentals: The Dollar Index gained for the second session in a row on the heels of Fed Chair Powell’s first congressional testimony. We discussed yesterday that the strength of the move in currency markets due to his more assertive tone was likely to last at least 24 hours. His testimony resumes tomorrow at 9:00 am CT and the test traders will face is to identify whether his remarks Tuesday were overblown. Yes, he is optimistic on the U.S economy but we do not believe that this should call for four rate hikes. Ultimately, we imagine that the price action in the dollar will fish for a high tomorrow and Friday while the euro does the same for a low.
On the data front, German Unemployment came in better than expected this morning while Eurozone CPI was in line. The second look at U.S. Q4 GDP was in line with reduced expectations while Consumer Spending was a bright spot. Pending Home Sales though was abysmal, just as New Home Sales was earlier in the week. Tomorrow morning is German Manufacturing at 2:55 am CT and Eurozone Unemployment rate at 4:00. The big read comes out of the U.S with the Fed preferred inflation indicator, the PCE Index due at 7:30 am CT. If this number misses, all of Powell’s hawkish comments, or at least the ones driving this market will run into a brick wall. Also due with this number is weekly Jobless Claims, and Personal Spending, Income and Consumption data. Manufacturing PMI is at 8:45 am CT and the bigger ISM Manufacturing is at 9:00. NY Fed President Dudley speaks at 10:00 and the Beige Book is due at 1:00 pm CT.
Technicals: This is when we must take a step back from our bias and ask ourselves, is this what we have been waiting to buy? First and foremost, we do not want to catch a falling knife, we do not need to pick a bottom. Second, yes, our long-term bullish thesis has not changed. Ultimately, it will be important to digest tomorrow’s data and Powell’s testimony on the fundamental side. In conclusion, we have major three-star support still at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Session close: Settled at .9386, up 65 ticks
Fundamentals: The began a march north as soon as the reopen last night. Price action shook off a poor read on Japan Industrial Production but must have liked the worse read on China Manufacturing PMI which was at the lowest level since contracting in July 2016. The safe-haven bid really picked up this morning around 9:30 am CT as the yen capitalized on renewed stock market weakness and a very poor read on U.S. Pending Home Sales. The S&P put in its second loss of more than 1% and the Yen is now fundamentally and technically set up for further gains. However, there is still gauntlet of data and speakers tomorrow that traders must keep a very close ear to. Capital Spending and Foreign Buying data is due out of Japan at 5:50 pm CT. Manufacturing PMI is at 6:30 pm CT.
Technicals: Price action in the Yen got out above first key resistance, held it afterward and settled above it.
Session close: Settled at .7778, down 18 ticks
Fundamentals: The Aussie began the session on weak footing but recovered well in the morning hours. Private Sector Credit data missed along with the very poor read on China Manufacturing mentioned above. However, the sellers showed back up in U.S. hours and price action was a slow bleed from there. While fundamentals are leading a stronger U.S. dollar in the near term, technical buying against the February 9th low are stalling the sellers.
Technicals: Price action is facing major three-star support dead on...
Session close: Settled at .7796, down 46.5
Fundamentals: Though we have not turned bearish the Canadian, we have been negative on it of late. Crude oil lost significant ground today on data that showed a build in inventories with a small addition in production. This along with a stronger U.S. dollar and weak technicals significantly weighed on Canadian. A bright spot though was a better than expected read on the Raw Materials Price Index. Tomorrow is Manufacturing PMI and Friday is GDP data. We believe there will be value in the Canadian at a lower level.
Technicals: The technicals are very weak but closely approaching major three-star support.