Thursday, March 2, 2017

Currencies: "Dollar Remains Bid"

The last two weeks action via FinViz:
102.03 +.25
And from Marc to Market:
The US dollar is bid against the major currencies as the combination the increased expectation of a Fed rate hike and the President's commitment to fiscal stimulus buoys sentiment.  The dollar-bloc, where speculators in the futures market, have grown a net long position, are leading the move. 

The Australian dollar is the best performer this year, but is the worst today, giving back 0.75%.  It has repeatedly tested the $0.77000 area, and today's disappointing trade figures and ideas that iron ore prices may have peaked (after a 70% rally over the past eight months) has helped spur the pullback toward the lower end of the range (~$0.7600).  The January trade balance was a third of the A$3.8 bln expected. 

The dollar is extended its gains against the yen for the fourth consecutive session.  It is the longest advancing streak since around the US election last November.  The greenback is now at two-week highs to approach the upper end of its range since the middle of January seen in the JPY115.00-JPY115.60 area.  The drivers seem clear.  Rising US rates (and spread over Japanese rates) and rising equities.  The US 10-year yield is also rising for its fourth consecutive session.   

The S&P 500 has risen in four of the last five sessions.  Its 7% gain, year-to-date coming into today's session, is easily the most within the G7.   Japan's Topix has a three-day streak in tow.   A note of caution is in order.  The Topix gapped higher to its best level since late 2015, but the initial upside momentum could not be maintained and the close was on the lows.  Wednesday's high, about 0.6% lower than the close (~1554) will be important in tomorrow's price action. 

European bourses are struggling.  Minor losses are being recorded....MORE