Weekly market Analysis

Commitments of Traders

EUR futures was the biggest adjustment this week. Speculators added 5.6K new longs ( the highest amount this year ) but at the same time added 17K new shorts ( the highest amount since Oct 2016 ). There were insignificant adjustments made in GBP futures. Speculators covered 786 longs and added 38 shorts. Speculators kept buying AUD futures again. This week they added fresh 9.4K longs and left shorts unchanged.Changes in JPY positions were insignificant.

Probabilities of the hikes were stronger once again. March is now prices at 27%, May at 52%, June at 70%, July 75%, Sep 83%, Nov 85% and December at 935. There is a significant data out this week and it could shift the odd for more than expected rate hikes this year. The March hike is unlikely but there would be another opportunities during the year.

This Week's Risk Events

Tuesday 28 Feb

1:30pm USD Prelim GDP q/q
A quarterly GDP figure is expected to print 2.1% vs 1.9% previously. GDP numbers has been coming our strong recently. There is no reason to believe this number will be worse than expected. Good number will be supportive for USD and interest rate hikes. Only large deviations to the downside will have impact on the price of US Dollar.
3:00pm USD CB Consumer Confidence
Confidence figures are expected to come in at 111.3 vs 111.8 pior. Again this report should not surprise and is likely to be USD supportive.

Wednesday 1 March

12:30am AUD GDP q/q
Australian GDP is expected to come in at 0.7% vs a negative 0.5% previously. Australian data has been strong but AUDUSD is trading at the major resistance and is overdue a correction to the downside. Strong USD data might prevail, overshadowing even much better Australian GDP figure.
1:45am CNY Caixin Manufacturing PMI
Expected to print 50.9 vs 51.0 previously. As long as this figures stays above the 50 mark, it indicates expansion and should be positive for the market. Lower than 50 would suggest contraction and could send equities and commodities currencies lower. Watch AUD during this event.
9:30am GBP Manufacturing PMI
Market expects 55.7 vs 55.9 pior. Manufacturing is not a major part of British economy and this report tends to have little impact on the GBP. ( unless massive deviation is the case ) UK services PMIs are much more important in FX.
1:30pm USD Core PCE Price Index m/m
FED’s prefered measure of inflation is expected to print 0.3% vs 0.1% previously. Market tends to react much more to CPI reports so I don’t expect this to have much impact, unless major deviation is printed.
3:00pm CAD BOC Rate Statement, Overnight Rate
Expected to stay unchanged at 0.5%. Traders will watch for the tone of the statement. Speculators loaded up on long CAD futures recently and a hawkish tone of the statement could confirm long bias in CAD
3:00pm USD ISM Manufacturing PMI
Expected to come in at 56.2 vs 56.0 prior. This is likely to be a market mover as manufacturing is a significant part of US economy and traders will be watching it

Thursday 2 March

9:30am GBP Construction PMI
Expected at 52.2, unchanged from previous read. This figure has been lower since the beginning of the year so deviations to the upside will be GBP positive. Lower again number will confirm an issue in UK construction industry.
10:00am EUR CPI Flash Estimate y/y, Core CPI Flash Estimate y/y
Core expected at 0.9% vs unchanged previously. Inflation is likely to hold the expectation hence it should have little impact on EUR

Friday 3 March

9:30am GBP Services PMI
Much more significant piece of data for UK economy. It is expected to print 54.2 vs 54.5 previously. Similarly to construction sector, services were slow this year. Market expects it to tick up a little in the month of February
3:00pm USD ISM Non-Manufacturing PMI
Market expects it at 56.5 vs unchanged from previous figure. This should also come in strong supporting USD.