Market Analysis by FXPrimus – Focus on French Election & Euroskeptic PVV is losing ground in Netherlands

March 7, 2017

Trading Ideas For The Day - Marshall's Daily Digest.

Market Analysis by FXPrimus – Focus on French Election & Euroskeptic PVV is losing ground in Netherlands

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Today’s trading ideas

French Risks to EUR

The market is focusing on the French elections.

The euroskeptic PVV is losing ground in the Netherlands, but there’s no similar trend in France, especially as the candidates from the other major parties are in disarray.

Political risks may weaken EUR further.

GBP Sentiment Poor

GBP doesn’t have much going for it nowadays, what with signs that the UK economy is starting to feel the (negative) impact of Brexit plus the political uncertainty surrounding the whole affair.

I think GBP could weaken further.

Profit-Taking Likely on AUD

AUD gained following the RBA’s meeting, as I expected.

Now however with commodity prices under pressure – copper down 1.1%, Shanghai metal futures lower – I think some profit-taking could come in and push the currency lower.

USD Generally Firmer

The dollar was generally firmer Tuesday as European politics continue to roil the FX market.

Former French PM Juppe yesterday announced he wouldn’t be stepping in to replace Fillon, who is embroiled in a controversy over payments to his family, and the leaders of the conservative party unanimously backed Fillon.

This makes for more divisions among those voters who don’t support the euroskeptic National Front.

Separately, support for the euroskeptic PVV party in the Netherlands seems to be fading ahead of next Wednesday’s vote, but the outlook for that election doesn’t seem to be impacting the markets so much.

AUD up, GBP down

AUD rose ahead of the RBA meeting and then extended gains after the central bank came out with a relatively upbeat statement.

It said “conditions in the global economy have continued to improve” and domestic consumption is picking up.

GBP by contrast fell ahead of a vote in the House of Lords over the details of the government’s Brexit bill.

OIL up, GOLD down

Oil prices rose as Iraq said it was ready to participate in OPEC’s output cuts in 2H if OPEC decides to extend the policy.

Currently Iraq is exempt from the output cuts.

Gold extended its gains as the dollar rose and markets looked towards next week’s likely hike in US interest rates.

Today’s schedule

  • German factory orders.
  • UK Halifax house prices.
  • EU Q4 GDP (final estimate).
  • US trade balance.
  • Canada international merchandise trade.
  • Japan BoP current account balance.
  • Japan Q4 GDP (final estimate).
  • China trade balance.

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