Week Ahead: Trading Outlook

Key Events This Week: March 9th – 13th

NZD: RBA Rate Decision Mar 11th
AUD: Unemp Rate Mar 12th
USD: Advance Retail Sales Mar 12th, Univ Of Michigan Confidence Mar 13th
CAD: Undemp Rate Mar 13th

USD Index: Short Term (1-3 Days) : Bullish – Medium Term (1-3 weeks) Bullish

The Greenback remains strong into the weekend with the latest NFP number striking another positive tone and fuelling anticipation of a possible June Fed lift-off. Growth and rate differentials continue to favour the Dollar against its European and Japanese counterparts and the index pushes into new YTD highs.

EURUSD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

Continued its downward trajectory last week, with the ECB meeting passing mostly as expected. QE is set to begin this week and the ECB has clarified its willingness to buy negative yield bonds and it’s commitment to continuing purchases through September 2016. The ECB’s stated commitment to easing saw the single currency push through the important psychological figure of 1.10 only for the blockbuster NFP number to push price down even further into the 1.08s .

USDJPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

Recent improvements in data add to signs of growth in Japan suggesting that the BoJ will not ease further this year even against the backdrop of global CB action. However continued signs of strength out of the US are pushing any JPY positives to the side and a surging Nikkei is forcing increased exporter selling of JPY which is likely to continue through Japanese elections.

GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

After a five week run up off the lows, the UK currency saw a decline last week, falling more than 400 pips off the highs with the strong NFP print proving the final nail in the coffin for GBP. Data out of the UK remains robust and the BoE continues its relatively hawkish tone however, uncertainty in the lead up to the May elections weighs on the currency and attention to the Fed lift off leans heavily .

USDCAD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

After surprising markets with an unexpected cut and taking a March cut off the table. Yesterday’s meeting saw further hawkish surprises with the BoC shifting away from further easing citing an improvement in financial conditions adding that risks surrounding inflation are now more balanced. However, any CAD positives were upstaged into Friday on the NFP print.

AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

A choppy week for the Australian currency. The recent RBA meeting further easing was postponed but not cancelled. Policymakers maintain the view that a weaker AUD is needed to add stability to the economy. With a Fed lift off nearing and Chinese growth forecasts being revised lower, AUD is likely to weaken into mid year. The AUD ended the week trading through the lows of the weekly range, failing against Dollar strength on the back of a strong NFP print.