Intraday Market Thoughts

Draghi Lifts Toe off Gas

by Adam Button
Apr 27, 2017 23:11

Draghi took a small step away from the ECB's dovish stance but it wasn't enough for EUR/USD traders. The pound was the top performer while the euro lagged. New Zealand trade balance and a heavy slate of Japanese data are due next. 2 new Premium trades have been opened, one in the euro the other in a major index.

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Draghi Lifts Toe off Gas - Eur Metrics 27 April 2017 (Chart 1)

Mario Draghi said the ECB was moving towards “a more balanced configuration” after holding rates unchanged on Thursday. There was speculation about a more pronounced shift but the ECB will likely wait for new forecasts in June.

The euro initially jumped to 1.0930 from 1.0885 but quickly reversed down to 1.0851. Despite the disappointment, that's still above the Dec-March range, the 200-DMA and the previous cluster resistance.

The pound also broke above a shorter-term range as the period of consolidation after the election call ended. The rise to 1.2917 was the highest since October.

The Canadian dollar remained the most volatile currency this week. USD/CAD sank more than 100 pips in Asia after Trump had a change of heart on NAFTA but it was all erased and more in a steady rise to a 14-month high of 1.3671. The high came as oil fell on a restart to Libyan oil production but even as crude recovered, USD/CAD remained well-above 1.36. One story that's weighing is an implosion at mortgage lender Home Capital in what could be the first sign of trouble in Canada's runaway housing market.

The highlight on the economic data calendar was US durable goods for March. The core category rose 0.2% compared to 0.5% expected but that was largely mitigated by a revision higher to the prior. Better shipments added a slight upward bias to Friday's first look at GDP but analysts are generally pessimistic and the Atlanta Fed sees just 0.2% growth.

USD/JPY continues to chop in the 111.20 to 111.70 range. It could get a jolt when CPI, retail sales and employment numbers are released at 2330 GMT. The national CPI is the main line to watch, it's forecast up just 0.3% y/y.

The other release comes at 2245 GMT when New Zealand is expected to report exports at $4.66B in March and imports at $4.30B. That's a trade surplus of just under $370m. Note that the kiwi sank below the March low on Thursday and is the worst performing major since Trump took office.

Act Exp Prev GMT
GDP (m/m)
0.1% 0.6% Apr 28 12:30
Eurozone Spanish Flash CPI (y/y)
2.6% 2.5% 2.3% Apr 27 7:00
Eurozone CPI Flash Estimate (y/y)
1.8% 1.5% Apr 28 9:00

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