Daily forex rundown: Euro, yen, Aussie & CAD

Euro (March)

Session close settled at 1.2006, up 26.5 ticks

Fundamentals: The euro started the session off on very strong footing gaining nearly a penny to a high of 1.2066. There was no major fundamental data to drive the rally, but instead, German 10-year bond yields followed the U.S. higher and this began to put pressure on European equity markets. European equities and the euro trade fairly inversely at times with one pushing the other; the DAX lost .78% on the session and this can help explain some of the euro rallies. Ultimately, traders want to be long the euro for a number of fundamental reasons, we support this and have discussed this at length over the last couple months. As stocks stabilized, the euro trimmed much of its gains. Chicago Fed President Evans who dissented on the December hike reiterated holding off until midyear before another hike. Dallas Fed President Kaplan advised the Fed should be careful overheating the economy considering the already massive debt and incoming tax plan. St. Louis Fed President Bullard discussed inflation targeting and those true inflation expectations may have drifted below the target. Tomorrow we have Eurozone Industrial Production at 4:00 am CTand the ECB Monetary Policy Minutes at 6:30 am. In the U.S. we have PPI data along with weekly Jobless Claims at 7:30 am CT. Federal Budget Balance is at 1:00 pm CT and NY Fed President Dudley speak at 2:30 pm CT.

Technicals: Today’s price action was very constructive in the Euro even though it finished more than half a penny from the session high. 

Yen (March)

Session close closed at .9012, up more than a penny

Fundamentals: The Yen continued its two-day win streak on the heels of what could be the beginning of the end of the Bank of Japan’s bond purchase program. Monday night, the BoJ announced that it will taper purchases in issues longer than 10 years and the ripple effects are still occurring. Yields in the 10-year JGB rose today along with yields in the 10-year. Furthermore, do you know what takes notice to quickly rising treasury yields? The equity markets. Global equity markets were taking it on the chin early this morning and this provided further support to the safe-haven currency. Listen, we don’t know if this is truly the beginning of the end of their program or if it’s a way to steepen yield curves around the globe, but what we do know is this is the exact reason we have been Bullish the Yen for months; a true value area and traders have priced in and continue to bet on a too dovish Yen, this is a massive short squeeze and every rally begins with a short squeeze. Friday’s U.S CPI read will be critical.

Technicals: We have been Bullish the Yen and believe this could be the time it finally breakout out above major three-star resistance... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.

Aussie (March)

Session close settled at .7835, up 13 ticks.

Fundamentals: The Aussie continues to consolidate after a monster rally over the last month. Tonight’s Retail Sales data will be critical and as we discussed last night; there are two camps on this, those that believe data has begun to turn the corner and those that believe it went through a period of being so poor it could simply only get better. This is due out tonight along with Business Confidence data at 6:30 pm CT.

Technicals: Today’s price action left a tail with a new high on the week at .7865, another failure just shy of our major three-star resistance level. 

Canadian (March)

Session close settled at .7957, down 74.5 ticks

Fundamentals: The Canadian got taken to the woodshed for a hammering just before settlement at 2:00 pm CT on news that it is believed that President Trump will pull out of NAFTA. After trading to a session low of .79525, price action stabilized from the knee-jerk reaction of nearly a penny. Let’s take a step back and look at the situation, we all know President Trump is probably the toughest negotiator out there and economically it would make zero sense for the U.S. to completely pull out of NAFTA. He is simply working to get what he believes to be the best deal, in other words, when the sides meet in about two weeks we believe we will see positive developments. Canadian Building Permits widely missed the mark this morning and we look to Housing Price Index tomorrow at 7:30 am CT.

Technicals: Today’s price action was a fundamental overreaction and traded exactly to the 100-day moving average.