Daily Insights Report 27/02/27

• 31 Mar 2017

27 Feb 2017

More hints about the timing of the Fed’s interest rate rise will likely be seen this week as different members of the Federal Reserve have scheduled events this week. Starting with Robert Kaplan (head of the Dallas Federal Reserve) on Monday. Stanley Fischer is also scheduled to give a speech this week. The week will end with Chairwoman Janet Yellen giving a speech in Chicago on Friday. On Thursday, the Fed will release its Beige Book. This book of pertinent data is typically released two weeks before FOMC meetings, and will be discussed at the meeting.

The main themes that will be seen in the Beige Book are likely to be labor market slack (especially underemployment), inflation, and the overall economic expansion.

Sales of new single-family houses in the US increased by 3.7% to an annual rate of 555,000 in the month of January. The US housing market as a whole has performed well, but there is a different story when looking at different regions. In the Northeast, Midwest, and South – there was a rise in sales. However, sales fell in the West fell. While this number is still higher than what was shown in December’s data (535,000), it is still shy of the expectation of 570,000.

– The JPY strengthened slightly by 0.1% to reach 112.05 per Dollar in the early trading session in Japan.

– The GBP fell 0.4% after a report showed that the UK Prime Minister may be preparing for an independence referendum coming from Scotland which would separate Scotland from the UK.

United States Dollar (USD)

Durable Goods Orders

Durable goods orders are expected to rise for the month of January after the transportation sector dragged it for the last two months. Core orders have been steadily growing, and grew 2.1% year-over-year in the fourth quarter last year. The general strength of global growth and the increase in prices in the commodity sector have helped push demand for durable goods in the US.

Pending Home Sales

This index is set to increase for the second consecutive month in January. This is because the housing market continues to grow. Existing home sales rose to a ten-year high in January. Sales have also continued to grow because of increased lending to buyers from various financial institutions. Mortgage applications for home purchases saw the four-week moving average to reach a seven-month high in January before slightly dipping in the month of February.

Commodities

– Gold was little changed and was trading at $1,257.02 an ounce. The metal jumped 1.8% last week and this was the fourth consecutive week of gains. This has been the highest value of gold since the US election.

– While both Brent and West Texas Intermediate (WTI) crude fell on Friday’s trading, the price of oil still increased by 0.2% for the whole week. Crude oil futures were steady around the $54 per barrel.

Technical Analysis

Looking at the AUDJPY 4-hour chart below, we can see that the currency is finding support at the 86.00 level. the 86 level is in the middle of the bottom half of the channel and near the 200-day SMA (red line). The scholastic chart also shows that a divergence is in the process. While the JPY has shown to be volatile in recent times, the overall outlook is that it will continue to strengthen in the long run. For this reason, it may be appropriate to enter a trading position that would allow the JPY reach 88.00