Weekly Fundamentals – 21 March 2015

Posted On 21 Mar 2015
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At the beginning of last week’s commentary we outlined how $ bullishness prevailed and that such an extreme skewed viewpoint would revert back to its long term mean. That is exactly what happened on Wednesday as a $ ‘flash crash’ occured peeling the best part of 3% off the $ Index value. Thursday saw a resumption of the upward move but that was swiftly turned round on Friday.

We can expect more of the same going forward.
USDUSD data starts on Tuesday with the release of CPI, Core CPI and New Home Sales. CPI which measures goods and services including food and energy purchased by consumers is expected to come in at 0.2%. Core CPI which excludes food and energy is expected at 0.1%. These two are followed by New Home Sales expected at 472,000.
On Wednesday we Core Durable Goods Orders which excludes transportation goods is estimated to come in at 0.4%.
Thursday we have the customary Unemployment Claims which is thought to show that a further 295,000 joined the ranks of claimants.
On Friday we have GDP expected to show growth of 2.4% and The FED Chairperson Yellen speaks.
EURO: Euro news starts on Monday when the ECB Governor, Draghi testifies on monetary policy before the European Parliament’s Economic and Monetary Affairs Committee in Brussels.
On Tuesday we have French Manufacturing PMI expected at 48.9 signaling contraction and German Manufacturing PMI at 51.5 signaling growth.
Lastly for the Euro on Wednesday we have German IFO Business Climate data which is estimated to come in at 107.4.
GBP: On Tuesday we have CPI thought to be 0.1%.
Thursday sees Retail Sales forecasted to show growth of 0.4%.
Importantly on Friday the BOE Governor speaks at a Bundesbank Conference in Frankfurt.
YEN: All news for the Yen takes place on Thursday when we have Household Spending thought to show contraction of 3.1%; Tokyo Core CPI showing a rise of 2.2% and Reatil Sales again showing a fall of 1.4%.
AUD: There is nothing of note for the AUD this week.
CNY: Only one item of note for the CNY this week which takes place on Monday when we have the HSBC Manufacturing PMI number thought to be 50.5 meaning that the economy is expanding.
OUR VIEW: A less busy week in terms of both economic data and Central Bank statements/activity.
However last week’s price action in the USD will have made market participants slightly less sanguine about its prospects and nervousness may spill over into USD profit taking. This may entice further closing of extreme long positions.
It will be volatile.
Stay nimble. Good luck trading.



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