Growth Aces Research Team
Growth Aces
EUR/USD: Trump rally is over for now
Macroeconomic overview
Jeffrey Lacker, the hawkish president of the Federal Reserve Bank of Richmond, said he is worried inflation could surge unless the U.S. central bank raises interest rates faster than his fellow policymakers anticipate. Most of the Fed's policymakers see the central bank raising rates three times this year.
The market ignored hawkish comments from Lacker. The dollar wallowed near seven-week lows in Asian trade on Tuesday, pressured by concerns about the impact of U.S President Donald Trump's protectionist trade stance.
The benchmark 10-year yield posted its biggest one-day drop in more than two weeks as concerns about the fallout of Trump's tough stance on trade spurred safe-haven demand for bonds.
Trump's nominee for Treasury Secretary Steven Mnuchin said that an excessively strong dollar was negative in the short term, which put additional pressure on the dollar.
Technical analysis
The situation has not changed a lot from yesterday. We see a small retreat in the morning of the European trade, but this does not change an overall bullish structure.
Yield spread between German and U.S. 10-year bonds
Trading strategy
EUR/GBP: May must get parliament approval to trigger Brexit
Macroeconomic overview
Britain's pound surged to its highest in five weeks against the USD on Monday as investors priced in a defeat for the government in its appeal against a ruling that forces it to consult parliament before formally triggering EU exit talks in March.
Today the UK Supreme Court ruled on Tuesday that Prime Minister Theresa May must get parliament's approval before she begins Britain's formal exit from the European Union. We see a ‘buy the rumor, sell the fact’ reaction today as GBP weakens after the court decision.
Recent macroeconomic data from the UK has been broadly mixed, with upbeat wage growth figures offset by weaker hiring and investment numbers. Official national retail sales released on Friday saw the biggest fall since April 2012, dropping 1.9% mom in December.
Technical analysis
The EUR/GBP is close to the rising December-January trendline and a close below this trendline may signal a deeper downward move. EUR/GBP bulls need a break above 0.8663/80 resistance area to feel more comfortable with their positions.
Yield spread between German and British 10-year bonds
Trading strategy
AUD/USD: Technical analysis suggests a corrective move in the coming days
Macroeconomic overview
The Australian dollar touched two-and-a-half month highs on Tuesday as the greenback wallowed on concerns about the impact of U.S. President Donald Trump's protectionist trade stance. Trump formally withdrew the United States from the Trans-Pacific Partnership trade deal on Monday, distancing America from its Asian allies even as China's influence in the region rises.
CPI numbers tonight in Australia are set to confirm the general theme seen in the fourth quarter 2016 in most countries, i.e. an acceleration of inflation, mostly driven by higher oil prices and therefore boosting primarily the headline indices.
The Aussie dollar has run very fast so far this month, which may trigger some profit taking from time to time, especially if macroeconomic data disappoint.
Technical analysis
The AUD/USD struggles to hold gains on rallies toward 0.7600. A doji candlestick on Friday and long upper wick on today’s candle suggest a corrective move may be coming.
Yield spread between Australian and U.S. 10-year bonds
Trading strategy
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AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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