Morning brief for March 20
The euro surged to 1.0765 as investors now feel relieved that anti-European Union candidate Geert Wilders lost the Netherlands election. Attention is centered on the French election, with the first Presidential debate scheduled for today. The recent opinion polls show centrist Emmanuel Macron would be nearly ahead of far-right leader Marine Le Pen in first-round voting, before beating her in the run-off. Over the weekend, German chancellor Angela Merkel clashed with the US President Donald Trump in trade. Today markets will be looking for commentary from Fed speaker Evans striving to decipher whether there is a push-back against the market interpretation of the recent rate hike and monetary policy statement.
USD/JPY slid to 112.5 in the course of the five consecutive days. The next support lies at 111.12 (38.2 % Fibo retracement level from the low of June 24, 2016). The rebound from the present levels followed by the break of 114.00 resistance will signal about the USD recovery. On Saturday, the annual meeting of G20 finance ministers ended without an elaborated agreement on free trade. The global shift to the protectionism has been implicitly highlighted. Today’s news flow as well as data flow are very light. It was probably a Japanese bank holiday which might have contributed to the lack of steam in the movement of the pair.
AUD/USD spiked to 0.7725 in the past session mainly on the broad weakening of the US dollar. There is still a sturdy resistance on the upside located at around 0.7740. Kiwi has also benefited a lot from the USD depreciation. NZD/USD still has time to advance further at least to 0.7130.
Loonie has strengthened significantly following the Fed’s interest rate decision. USD/CAD slumped to 1.3310. The recent CAD’s gains will likely to fade in the nearest future due to the great divergence between the monetary stances of BoC and Fed. BoC Governor Poloz is expected to remain a dovish tilt in April.
The British pound was an outperformer in the last session. It rose to 1.2390 in the Asian session A further upsurge towards 1.2475 is not ruled out. There also was some news flow from the UK at the weekend. Scotland First Minister Nicola Sturgeon accused UK PM Theresa May of being intransigent on the timing of the referendum on Scottish independence. She believes that making Scots wait more than three years until EU-UK talks end is not fair with regard to Scottish people.
Oil prices extended their losses after Baker Hughes total US rig count posted an increase in total rigs to 789 and Saudi Arabia Energy minister Al-Falih said the country is ready to extend the deal to curb excessive crude oil production in the second half of the year. Brent oil futures dropped to $51.40 in the course of last 4 days on the data release and announcement.