Market Drivers February 9, 2017
Cable bursts higher
RBA’s Lowe does not jawbone
Nikkei -0.53% Dax 0.21%
Europe and Asia:
AUD NAB Business Confidence 5 vs. 6
USD Weekly jobless claims 8:30
It’s been a quiet night of trade in the FX market with most of the majors contained to very tight ranges as the economic calendar remains barren.
Most of the action in FX was due to the aftermath of the RBNZ decision, which as expected kept rates on hold. However, comments from Governor Wheeler about the strength of the kiwi helped jawbone NZD/USD lower and the pair ultimately broke the .7200 figure before finding some support.
In contrast, RBA Governor Lowe provided a generally upbeat message in his speech at A50 Australian Economic Forum Dinner, in Sydney, stating that he expect the Australian economy to grow at the 3% rate and refrained from any commentary on the exchange rate. Mr. Lowe laissez-faire attitude provided a modicum of support for Aussie bulls and the pair pushed higher in early London dealing but stalled once again at yesterday’s highs of .7661.
The only unit that showed clear strength was the pound which rose for the second day in a row hitting a high of 1.2580 before backing off. There was no news on the wires to drive trade but the unit’s relative strength over the past several days clearly indicates that the market is becoming more and more comfortable with the idea of Brexit, especially in light of the fact that populist sentiment across Europe indicates that the impulse to pull out of the union may become more widespread.
With US calendar quiet as well, the North American session is likely to be driven by technical rather than fundamental factors. USDJPY continues to hold support ahead of the 111.50 level for two days in a row and after multiple failed attempts to break that level, shorts are now in danger of a squeeze above the 112.50 level especially if US yields stage any sort of rally.