Feb 16, 2017 - Market Update

Short recap

Asian stocks still supported by Wall Street

US stocks still at highs, valuations adjusted for inflation at 1997 levels

USD did some woo-doo after very strong US data yesterday when profit taking erased all the gains

Yellen’s comment about “growth being quite disappointing” likely scared some traders

Despite US GDP growing very closely to Fed predictions

DXY dropped significantly from yesterday’s high, 50 DMA at 101.37 acting as resistance now

10-yr Trys yields printed 2.52% yesterday but retreated to 2.48% (as of writing)

Mar 15 hike probability at 44% from 34% yesterday

Oil lower on concerns coming from record high crude/gasoline stocks

Car registrations in EU up more than 10% what may benefit Volkswagen as it regains its share

Peugeot-Citroen acquisition of Opel/Vauxhall not welcomed in Germany/UK amid fears of loosing jobs

Tesla printing the highs

Nestle in line with estimates, EM markets still focus

US stock investors favoring international markets over “America First”

Canada Prime Minister Trudeau to address the EU Parliament before meeting Merkel

Will be definitely watch in Canada in the light of tweaking NAFTA as well as on EU side, as a free trade message to Trump

FX Options

EURUSD – likes 1.0600, scared of 1.0500

Trending lower (4 hour chart) despite a small break

RR favoring more and more EUR puts

Strikes with expiry on May 8 (FR elections on May 7) well bid

USDJPY

Vols supported by 10-yr Trys yields between 2.48%-2.52%

Not moving higher but should accelerate once spot moves higher

AUDUSD – good employment data

Small break above 0.7700 doesn’t look like lasting long

Vols trading at low levels, still have room to decline slowly

Implied vols lower vs realized

Data

EZ: ECB Minutes

US: Housing Starts – to increase slightly

US: Initial Jobless Claims – to increase slightly

Good luck Champs!

Mr Hawk

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