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Market Drivers March 30, 2017
Dollar Better Bid
EZ Sentiment dips
Nikkei -0.80% Dax 0.11%
Oil $48/bbl
Gold $1249/oz.

Europe and Asia:
EUR EZ Business and Consumer Survey 107.9 vs. 108.3

North America:
USD GDP 8:30
USD Weekly Jobless 8:30

It’s been a choppy night of trade in Asia and early European session, with most of the majors contained to narrow ranges in lackluster dealing. With little data on the economic calendar and even less newsflow trading was subdued most of the night.

The euro was notably weak as the pair slid to fresh session lows at 1.0730 on the back of lower than expected German inflation data. Despite ECB’s efforts at QE, the reflation trade is just not taking hold on the continent as German regional inflation readings came in at 0.3% versus 0.5% eyed. The news spurred concerns that the ECB will have to maintain its easy credit stance for longer than anticipated and that the much expected taper would have to be delayed.

In addition European business and consumer sentiment reading slipped a bit dropping to 107.9 from 108.3 as concerns about Brexit no doubt weighed on respondents view of future demand.

While euro plumbed session lows, both cable and USDJPY traded better. The former finding support at the 1.2400 level while the later found a base at 111.00. After several days of selling both pairs appear to have stabilized. With respect to cable the market is now in wait and see mode as negotiations will begin in earnest, now that UK has given formal notice that it will exit the EU. The next big event will be tomorrow when the EU President responds to the UK letter in EU Parliament. Although PM May struck a somewhat conciliatory tone, the EZ officials appear to be taking a harder line stating that no negotiations can even begin until UK pays all of it back dues the the EU.

In North America the focus will turn to US GDP figures due at 12:30 GMT. This is the final reading so the impact may be small, but the market nevertheless is looking at small upside revision to 2.0% from 1.9% earlier any positive bump could help push USDJPY higher. The pair has survived several test at the 110.00 level earlier this week and now appears ready to move towards the 111.50 level as short covering kicks in.

Boris Schlossberg
Managing Director

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