What is the possibilities of US Interest Hike in 2017?

March 2, 2017

US Interest Rate Hike, Post Brexit Influence and more Important Economic Data release!

What is the possibilities of US Interest Hike in 2017?

Trading Ideas For The Day – Marshall’s Daily Digest!

Check out the Brief Market Analysis of today below!

Dollar on a Roll

Expectations of a rate hike in March have risen to 84% from 38% just a week ago.

Eventually people may start to forecast more rate hikes too. USD could benefit, particularly vs JPY and CHF.

GBP may lose vs EUR

GBP is falling on Brexit fears. The construction PMI today and services PMI tomorrow could disappoint, as the manufacturing PMI did.

EUR on the other hand may benefit from recent polls on the Dutch elections.

Gold faces challenges

A stronger dollar and higher US interest rates are negatives for the metal.

Silver tends to do better than gold when the US economy is doing well.

A relative value play might be to sell gold and buy silver.

USD rises, JPY falls on FED thoughts

Expectations of a Fed rate hike in March increased further after Fed Gov. Brainard said a rate increase will likely be appropriate “soon.” US Treasury yields rose and USD gained as a result.

Market is now pricing in an earlier start to this year’s rate hikes, but not an increase in the total number.

The counterpart of dollar strength was JPY weakness, as JPY is the currency least likely to see a rate hike any time soon.

GBP down on Brexit, AUD up

GBP was the weakest of the G10 currencies after UK PM May suffered her first parliamentary defeat on Brexit.

The House of Lords voted to amend the Brexit bill to allow EU nationals to remain in Britain after Brexit.

The amendment can be overturned in the House of Commons, which will debate the bill on 13 & 14 March, but it’s still a blow to her authority and a possible threat to her timetable.

On the other hand, AUD was the 2nd best performing G10 currency (after USD) after 4Q GDP beat expectations (+1.1% qoq vs +0.8% expected).

It lost some of the gains after the January trade surplus came in much smaller than expected, but gradually recovered, perhaps because building approvals far exceeded estimates.

Oil lower, Gold Stable

Oil prices fell even though the Dept of Energy’s weekly oil inventory figures showed a smaller-than-expected rise in inventories that was also less than what the API had reported earlier.

Market participants may be upset that inventories are rising at all, since they are already at record levels. Moreover, US output continues to rise.

The gold price was little changed.

Today’s schedule

UK construction PMI; EU CPI; Canada GDP; US weekly initial jobless claims; Japan CPI.

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