Recap last week
Three words – Trump delivered strength. And the relentless USD followed suit – along with risk trades, mainly in the shape of US equities. USDJPY started Monday really weak but then bounced off a key level we’ve been shouting about at 111.60 It then made a weekly high of 114.75
Friday saw a USD correction only because the market is now focused on the rate of subsequent hikes – March being now fully priced in. We closed at 114.03 Please see FFF probabilities below:
The thing that caught my eye was EURUSD resilience. It pretty much paired weekly losses and finished at 1.0620 – I see a stronger base forming at 1.0520 and 1.0500 now. More on that later.
Most other currencies against USD lost ground and AUDUSD got hammered and it was about time. We bounced 12 ticks shy from our Call to Trade – see Linked in for more this week !
- US NFP this Friday needs to be a shocker for a March hike not to happen. 40k and weak wages might give them a cause for pause and the market exp is 185k Don’t count on it thought as often the FED looks at the 3 month average for guidance on hikes.
- ECB on Thursday. EURUSD is looking a bit perky as from Friday post US hike expectations in March. Any mention of tapering, CORE CPI projections higher, acknowledged of Germany (wishful thinking), or the statement rhetoric tweaking could be enough to send it higher. If Draghi is passively dovish I would still consider buying into 1.0500 anyway.
- USDCAD – I had a recent interview with Dukascopy and called for this lower. I was wrong and we are now 3 big figures higher. I still think this is over done as Trumpflation and FFF probabilities were the cause post Tuesday. Having said that look for buying at 1.3280/1.3310 area – see chart 1
- CABLE caught a bid Friday on USD correction and never looked back. 2400 will be tough to crack as a lot business has been done here. I like selling rallies generally but especially from 1.2350 into 1.2400 see chart 2 below:
- EURUSD – see previous note on recap. I actually see this higher but would be happy to sell LARGE at 1.0777 and more at 1.0830 area. This will be very a very difficult nut to crack – unless Draghi pulls out something more than his usual silver tongue. As mentioned before 0520 and 1.0500 is now a solid base but 1.0560 is a small support too. Before that I like 1.0675 then 1.0710 but lets see what Asia desk do before London opens.
That’s it from AP towers for now but check out Linked In for daily calls and updates.
Enjoy and discuss
Adam and Patrick