Daily Insights Report 07/02/17

• 31 Mar 2017

7 Feb 2017

The US will present a relatively quiet week since there are not many new data announcements scheduled. Investors will instead be carefully watching for any developments in the political space. The tone set at the beginning with the President’s Executive Orders might present many fluctuations in the coming months.

– The JPY saw little change and kept at the 111.70 per Dollar level.

– The Euro fell 0.2% to reach $1.0734 after sinking 0.3% on Monday.

United States Dollar (USD)

Trade Balance (December)

This report is likely going to show gains for both imports and exports for the last month of the year. While the country plans to reduce the trade deficit, the value of the currency could make it easier. Any significant movements in the value of the Dollar will determine the direction of the trade deficit moving.

Australian Dollar (AUD)

Monetary Policy

The Reserve Bank of Australia is likely to keep interest rate at 1.5%. With wage growth and rising commodity prices, a weaker AUD will likely provide some support in the coming year. While unemployment is not a growing concern in Australia, the type of work is – since more is becoming part-time employment. As a result, the domestic savings rate may go up. The RBA may want to keep its current policy stance to allow for more economic growth naturally without influencing financial markets and let market factors bring out fresh growth.

Commodities

– Oil increased 0.4% to reach $53.22 per barrel. This comes after it fell 1.4% in yesterday’s day of trading. An American oil producer (Baker Hughes) mentioned that it had increased its operations to the highest level since October 2015. It is likely that if the price of oil continues to rise, other producers will follow the same trend.

– The price of gold fell 0.2% after enjoying three days of consistent gains. It is currently around $1,232.50 which is the highest level reached since November.

Technical Analysis

USDJPY

Though there are some causes for volatility in this pair, there are reasons to start positions with this pair. Since the US will show a quiet week of economic data this week, it will give time for investors to build on speculation. Recent developments in the world economy have shown that monetary policy might no longer be the strongest factor when determining currency values. Trade disputes and manipulation claims have become more popular and have recently shown how quickly the value of a currency can change.

At the end of the week is a scheduled meeting of the Japanese Prime Minister to be held in the USA. The tone set from this meeting and the buildup is what is most likely to cause volatility in this trading pair. Previously, the President has believed that Japan has artificially devalued their currency to give them a competitive devaluation. The market may expect the JPY to depreciate, as the trend thus far has been shown like this. However, as the week continues and other countries release monetary policy decisions (New Zealand and India), the direction of where this pair might move will become more clear.