Market Review: United States Gross Domestic Product
Economic calendar (highest volatility): 26th March– 30th March 2018:
Timezone: (GMT -5:00) Eastern Time (U.S & Canada), Bogota, Lima
In the previous week, the United States (U.S) Federal Open Market Committee (FOMC) increased Interest Rates by 25 basis points raising the benchmark Fed Funds rate to 1.75%, a move which was largely expected by markets. The U.S Dollar (USD) saw some aggressive unwinding soon after the FOMC decision, as anticipated by the team here at FintechFX. This was best indicated by the U.S Dollar Index (DXY) which fell by almost a whole dollar from 90.37 pre-FOMC to 89.36 at the very end of last week. The aggressive unwinding also led to the rise in prices of safe haven assets and currencies, such as gold, the Japanese Yen (JPY) and the Swiss Franc (CHF) which strengthened to 1346.92, 104.71, and 0.9488 respectively. In addition to this, concerns on U.S President Trump's 'protectionist' policies continue to bring about fundamental pressures towards the USD. President Trump signed a memorandum imposing wide-ranging tariffs of up to U.S$60 billion on China. This adds on to the formerly announced tariffs which was imposed on steel and aluminium imports earlier this month. Meanwhile in regards to the G20 summit held last week, the key takeaway was Argentina's decision to not clamp down on cryptocurrency, and the overall acknowledgement by regulators in regards to the benefits in the technology. This however came with a caveat which emphasizes on the importance of regulation to protect the general interest of consumers and investors.
In regards to this week, the major volatility driver in our opinion looks to stem from the upcoming U.S Gross Domestic Product (GDP) which is scheduled for release sometime midweek. The recent 'protectionist' stance taken by U.S towards other nations could reflect on this upcoming GDP. The team here at FintechFX view that the markets will look for signs of potential repercussions on the American GDP to further evaluate on whether more FOMC Interest Rate hikes are viable this year.
The GBP/USD can easily be crowned as one of 2018's star performer; the pair is seen to have recouped much of it's post-Brexit losses as indicated in the strong uptrend visible in the chart below. The Bank of England (BoE) has cautioned that akin to the U.S, the BoE may also raise Interest Rates faster than expected. This statement sparked some optimism for GBP/USD prices as this message was reaffirmed during the BoE Interest Rate Decision meeting last week; the markets are now pricing in for a rate hike to take place sometime this May 2018. The team here at FintechFX views that at least the "buy on rumour" move seems to be holding strong for now as indicated by the well validated support line as shown in the chart below.
Formerly, the USD/CAD in regards to the chart below showed some pattern of a Wcykoff triggered sell-down. As formerly indicated, the Wyckoff sell move has since been reversed as the Canadian Gross Domestic Product (GDP) figures have fallen below expectation as of late. The stronger recent U.S Nonfarm Payrolls data have also brought about much USD strength as of late. Nonetheless, the team here at FintechFX view that the chart below shows some chance of a potential selldown to take place following an improving Canadian Consumer Price Index (CPI) achieved last week. This week, the Canadian GDP will come under scrutiny in which a positive result, will largely benefit the CAD.
Source (Charts): https://www.investing.com
Source (Economic Calendar): https://www.forexfactory.com/calendar.php
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