Mar 3, 2017 - Market Update

Short recap

Asia in red

EU opening lower

Smaller companies in UK getting ready for Brexit as they keep cash and reduce investments  

Peugeot-Opel deal may be announced in a couple of days

Henkel bidding for Darex Packaging (USD 1.05 bln)

Alcoa consolidating internally

FX brokers tempted by US market on upcoming financial deregulations

Snap up 41% first day on NYSE in most prominent tech IPO since Alibaba

May be reminding us 1999-2000 year with techs flying high, CBs supporting markets with cheap money

Kind of scenario when the last 1-2 years of bull market are very strong

US stocks valuation overstretched

But looking at Europe can be an option, especially if political risks are off the table

Gold consolidating, support at 1220

Silver dropped 4%, support at 17.38/17.73

US 10 yr Trys yield at 2.47%

Very busy day for Fed’s officials as they have last chance to tweak the market about March hike (now priced at 90%):

Evans, Lacker (1515 GMT)

Powell (1715 GMT)

Fischer (1730 GMT)

Yellen (1800 GMT)

If Fed hikes in March, the wording about potential acceleration of hikes will be crucial for the market

EUR – political risks in EZ vs better incoming data, risk of taper from ECB

USD – Trump stimulus policies, hikes

EURUSD – no change, overall market is positioned neutral in EUR

Res 1.0526 (61.8% Fibo)

Sup range 1.0500/20

Sup 1.0453-61

Sup 1.0340

Closing below 1.0460 important for big players as bears worked well the whole week. EUR may get stronger but against CHF, JPY, AUD…etc.

The risk are Fed speakers, if we do not manage to close below 1.0460/80 range (as something may be cooking around) the caution next week is warranted (ECB, US NFPs).

Reuters poll:

EURUSD at 1.0400 in 6m, 1.0300 in 12m

Trump not clear on USD

EURUSD options

Seen realized vols trading lower

1w Implied much higher at 9 than Realized at 4

1w expiry is covering Yellen tonight and US NFPs next Friday

RRs keep strongly favoring puts as we are sitting close to 2017 low of 1.0340

FR elections – despite recent opinion polls the expiries covering 2^nd round of vote on May 7 still trading at high end of volatility curve

Data

Fri:

EZ: Retail sales to print higher but trending lower

US: ISM Non-manufacturing activity index – expecting no change

US: NFPs only next week on Mar 10

Next Friday:

US: NFPs

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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