ing_logoIf it is not cancelled at the last moment, at 16GMT/17CET President-elect Trump will be holding his first press conference since last July. Having preferred to manage the news agenda through his Twitter account, there is some scope today for a slightly less orchestrated response to the press and potentially for the market to re-assess the more inclusive and pragmatic take on Trump policy priced in since his inauguration speech.

Despite being quite bullish on the dollar this year, yesterday we published a very short term, short USD/JPY FX Trader on the view that any antagonistic comments, or his proposed Secretary of State, Rex Tillerson, running into trouble in Senate Confirmation hearings (15:15CET) could see a market scale back on widely held long dollar positions. A break of 114.50/115.00 in $/JPY could prompt a clear-out tom 112.00/112.50.

Top of EUR/USD range looks firmly set at 1.0650/0750

On the other hand, EUR/USD consolidates with more action elsewhere (including TRY and MXN under heavy pressure). We retain the view that 1.0650/0750 should be top of the range in 1Q17. GBP continues to trade heavily. BoE’s Carney testifies at 15:15CET today. Even if he were a little hawkish (e.g. looking at impact of weak GBP on CPI), GBP looks a sell on rallies given the prospect of the UK supreme court ruling and a Hard Brexit speech from PM May over coming weeks. A break of Cable support at 1.2080/2090 (lows seen post October flash crash) could prompt another leg lower. EUR/GBP biased to 0.8830/40 over coming sessions.

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Polish MPC might not be as hawkish as market expects

Since last December’s MPC meeting, market expectations have undergone a U turn. In particular the Dec 30th release of CPI up at 0.8% YoY prompted FRA markets to price in a rate hike later this year. We stick to our call of flat policy rates this year, with the MPC expecting the recovery to show up no sooner than mid-17. We do not expect a hike before 1Q18 and those investors positioned for a hike should be disappointed – our team see value in the 2 year area of the POLGB curve, especially when weaker Dec activity data is published. We believe the Dec rally in the PLN was driven by both commercial flows and expectations of a 2017 MPC hike. A less hawkish than expected MPC today could be a catalyst for PLN to reverse recent gains. Favour EUR/PLN to 4.40/43

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