Short recap
Asia mixed to lower
Europe opening lower
Trump a year ago – USD strength means confidence
in US and his presidency
Mnuchin yesterday – USD weakness good for US
economy
…and market took it as a future direction of US policy
In other words the US trade war has begun and weak USD is
part of it
Market is concerned about widening
current account deficit (a problem for USD)
But bigger one is that there are still less and less
international investors who like to buy Trys
IMF’s Lagarde – USD value determined by markets
Bitcoin buyers getting more ground
China to tighten control over offshore private
equity fundraising
Mexican drug cartels
stealing fuel from refineries (USD 1 bln
of lost government revenues)
ECB today
Lots of speculations about
policy shift – not expecting any change, may be some word playing in March
Recent move in EUR creating
some headaches for ECB as inflation levels still low
Unlikely ECB will come up
with something hawkish, we need to wait until summer
So growth and inflation have
more time to surprise
Draghi to touch FX rates with
dovish comments after recent rise in EUR
EUR not overvalued
S&P – strong EUR to delay
tapering
EURUSD
USD still under pressure with
psychological 1.2500 in sight
Likely to test important
1.2516 (38.2% Fibo of 1.6038/1.0340 move)
Then 1.2597 (61.8% Fibo of
1.3992/1.0340 move)
Support from descending
trendline (highs 2008, 2011, 2014)
The 1.2400 may help to push
some longs off, to open door towards 1.2300-90 zone
1.2166 (50.0% Fibo), then
1.2092
USDJPY
Interest in USD from
importers and retail after o/n decline
Bids sitting at 108.50
Large options (USD 2.3 bln)
with strike at 110.00 expiring today
Support 109.06 (76.4% Fibo)
and 108.12 & 107.31 lows
Resistance 110.14 (61.8%
Fibo)
Equities
Lower USD = higher global equities for time being…
As we have easier credit conditions
And profits of US companies artificially higher due to
weaker USD
BofA owning more blockchain patents than peers
SEC looking into GE’s huge insurance charge
Company planning to sell USD 20 bln of assets
Goldman Sachs and Citibank shortlisted
to bid for metal business of Scotiabank
EU fines Qualcomm
(USD 1.2 bln)
Bombardier and Boeing to hear decision over
dispute on Friday
Earnings
Reporting today: Biogen, 3M, Caterpillar, Intel (update
on security issues), Western Digital, Celgene, Starbucks
Bonds
10-yr Trys yield at
2.64% vs 2.62% yesterday
10-yr Bund yield at
0.58% vs 0.56%
yesterday
No boom to doom for central Europe's bonds when
ECB stimulus ends link
Gold
Facing strong resistance zone where it got rejected in
2014/16/17
Mnuchin, weak USD, inflation up, geopolitical risks
supporting gold
More investors using gold as a hedge for potential spike
in volatility
With HFs aggressively buying since Dec
Resistance 1375 high, 1380 (38.2% Fibo), 1484 (50.0%
Fibo) both based on 2011/15 decline
Data/events
ECB rate decision
Jan 26 – Trump speaking in
Davos (1300 GMT)
Will be interesting to see
Macron/Merkel and the world
Against protectionism of
Trump/US
Jan 30 – US State of the
Union
Trump to announce an infrastructure plan but is not clear
who would build the infrastructure
Because of his anti-immigration policies, may be
Norwegian workers
But having no idea how many of them will come
Also to announce a new security policy moving away from
fighting terrorism
And focussing on challenges from growing military
strength of Russia and China (more military spending coming)
Jan 31 – FOMC
Feb 3 – Powell taking office as
Fed Chair (he is lawyer and not economist)
Feb 16 – Chinese New Year
Should you have any questions
feel free to contact me anytime.
Good luck Champs!
Mr Hawk
DISCLAIMER: This material was
created for informational purposes only and represents the Land of Trading
team’s view of the past and current economic and capital market environment. It
is not an investment advice and should not be viewed that way at all, and the
creators of this material cannot be held liable for any potential losses
resulting from trading, where despite this disclaimer someone would consider
this material as an investment advice. All rights reserved ©2016. Contact:
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