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19 Mar 2015
What's next: SNB takes the spotlight, USD uptrend at risk?
FXStreet (Bali) - There were some decent 2-way business moves in the Asian session on Thursday, with the overall net change being slightly positive for the interest of USD buyers, following a major squeeze in response to a surprisingly dovish turn on the FOMC rhetoric, revising both rate hike projections and growth significantly lower.
Main headlines in Asia
A very dovish announcement from the Fed - SocGen
New Zealand GDP Q4 beats estimates
New Zealand: Signs of a slowdown ahead - Capital Economics
Dominating themes in Asia - centered on JPY, AUD, NZD
The US Dollar managed to recover some losses in the Far-East session, with a first impulsive move to sell the currency in early hours being rejected by the market, in no mood to extend losses ahead of the European session.
AUD/USD made a high of 0.7848 last in US, and it seems to have been finished business topside from there, with a renewed buying attempt capped by 0.78, leading the pair to retest 0.7745/50 support. USD/JPY found a temporary bottom at 119.36, from where a recovery towards 120.25/30 has taken place. NZD/USD pushed higher until faced with a sizeable wall of mmacro offers circa 0.7545/50, resulting in a slow drift lower towards 0.7450/60 handle, with ST heaviness in price heading into Europe.
Heading into Europe - centered on EUR, GBP
In Europe, the two key events will be the Swiss National Bank (SNB) monetary policy decision (08.30 GMT) and the ECB’s third Targeted Longer-Term Refinancing Operation (10.15 GMT). While a lower profile Central Bank, it will also be worth monitoring the policy decision by the Norges Bank, amid disinflationary pressures and slow growth.
With regards to the SNB event, the Economics Team at Capital Economics expects the Central Bank to cut its deposit rate from -0.75% to -1.00%. Capital Economics' Economist Jennifer McKeown notes: "Admittedly, the franc has softened a bit after it surged in January following the shock abandonment of the cap. But, at CHF 1.06 per euro, it remains much too high for comfort."
The main interest for Euro traders will be the ECB’s third Targeted Longer-Term Refinancing Operation, with current expectations pointing at low numbers. As McKeown reminds us, "unlike the first two, which offered unconditional funds for the first two years, it will limit borrowing to three times banks’ net new lending since last April. As overall bank lending has fallen since then and uptake at the first two TLTROs was low, we doubt that banks will borrow much this time."
The European Council meeting is also kicking off today, and will see the employment situation on top of the agenda, moving Greece to the back-seat, if only temporarily.
Technically, and focusing on the EUR and GBP, Valeria Bednarik, Chief Analyst at FXStreet, sees a more constructive picture short term. On EUR/USD, Valeria notes, "in the 4 hours chart the price extended further above its 20 SMA, whilst indicators maintain their sharp bullish slopes well into positive territory." As per GBP/USD, Valeria added, "in the 4 hours chart the technical readings are also biased higher, with the RSI indicator strongly up near 61 after reaching oversold levels ."
Main headlines in Asia
A very dovish announcement from the Fed - SocGen
New Zealand GDP Q4 beats estimates
New Zealand: Signs of a slowdown ahead - Capital Economics
Dominating themes in Asia - centered on JPY, AUD, NZD
The US Dollar managed to recover some losses in the Far-East session, with a first impulsive move to sell the currency in early hours being rejected by the market, in no mood to extend losses ahead of the European session.
AUD/USD made a high of 0.7848 last in US, and it seems to have been finished business topside from there, with a renewed buying attempt capped by 0.78, leading the pair to retest 0.7745/50 support. USD/JPY found a temporary bottom at 119.36, from where a recovery towards 120.25/30 has taken place. NZD/USD pushed higher until faced with a sizeable wall of mmacro offers circa 0.7545/50, resulting in a slow drift lower towards 0.7450/60 handle, with ST heaviness in price heading into Europe.
Heading into Europe - centered on EUR, GBP
In Europe, the two key events will be the Swiss National Bank (SNB) monetary policy decision (08.30 GMT) and the ECB’s third Targeted Longer-Term Refinancing Operation (10.15 GMT). While a lower profile Central Bank, it will also be worth monitoring the policy decision by the Norges Bank, amid disinflationary pressures and slow growth.
With regards to the SNB event, the Economics Team at Capital Economics expects the Central Bank to cut its deposit rate from -0.75% to -1.00%. Capital Economics' Economist Jennifer McKeown notes: "Admittedly, the franc has softened a bit after it surged in January following the shock abandonment of the cap. But, at CHF 1.06 per euro, it remains much too high for comfort."
The main interest for Euro traders will be the ECB’s third Targeted Longer-Term Refinancing Operation, with current expectations pointing at low numbers. As McKeown reminds us, "unlike the first two, which offered unconditional funds for the first two years, it will limit borrowing to three times banks’ net new lending since last April. As overall bank lending has fallen since then and uptake at the first two TLTROs was low, we doubt that banks will borrow much this time."
The European Council meeting is also kicking off today, and will see the employment situation on top of the agenda, moving Greece to the back-seat, if only temporarily.
Technically, and focusing on the EUR and GBP, Valeria Bednarik, Chief Analyst at FXStreet, sees a more constructive picture short term. On EUR/USD, Valeria notes, "in the 4 hours chart the price extended further above its 20 SMA, whilst indicators maintain their sharp bullish slopes well into positive territory." As per GBP/USD, Valeria added, "in the 4 hours chart the technical readings are also biased higher, with the RSI indicator strongly up near 61 after reaching oversold levels ."