0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • $USDJPY Daily Pivot Points: S3: 104.74 S2: 105.3 S1: 105.52 R1: 106.08 R2: 106.42 R3: 106.98 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • White House Chief of Staff Meadows says stimulus discussions will last as long as needed tonight - BBG
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.61% 🇳🇿NZD: 0.60% 🇬🇧GBP: 0.21% 🇯🇵JPY: 0.05% 🇨🇭CHF: -0.14% 🇨🇦CAD: -0.34% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/tnW4af9aVr
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Silver: 7.24% Gold: 1.33% Oil - US Crude: 0.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/YbvtFCzKwH
  • US moves to tighten disclosure requirements for Chinese listed securities on US exchanges - BBG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.93%, while traders in US 500 are at opposite extremes with 76.34%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/2L02UUzPZP
  • The S&P 500 continues its move higher on Thursday with investor hopes for fiscal stimulus rise as the stalemate in congress endures. Now within 2% of its prior all-time high,Get your S&P500 market update from @FxWestwater here:https://t.co/LQvQw51Vcy https://t.co/ttKETOBHeU
  • #AUDUSD boldly broke above a 2019 resistance range, but negative RSI divergence shows upside momentum is slowing. Do you think the pair will capitulate or break past the upcoming ceiling at 0.7295? https://t.co/FV64qtuXXL
  • Trump says he is reimposing tariffs on Canadian aluminum- BBG
  • US Equity Update (Thursday Close): $DJI +0.68% $SPX +0.64% $NDX +1.27% $RUT -0.10% $VIX -1.65%
New Month, Old Concerns: ECB Easing, Fed Hiking, Brexit, Oil

New Month, Old Concerns: ECB Easing, Fed Hiking, Brexit, Oil

2016-03-01 12:39:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points:

- Influence of ECB, Fed meetings next two weeks omnipresent.

- Oil charts scream bottoming potential - crying wolf or legitimate?

- Risk management is the cornerstone of long-term success in trading - learn more.

It's the first day of the last month of the quarter, and if you think overall direction in markets has been lacking, we can all agree on one thing: higher volatility has flourished as the perception that central banks are losing control has spread.

Why does this matter?- central banks in the majority of developed economies (US, UK, EZ, and Japan; Canada is the exception now) are the last credible policy institutions in town as fiscal authorities flounder. Fiscal policymakers have taken their ball, gone home, and stayed there for a number of years, refusing to play with the other kids in the neighborhood, if you will.

Accordingly, with the next saga in the depressingly co-dependent relationship between markets and central banks gets set to unfold, traders are likely to keep their focus on the two major central bank meetings this month: the European Central Bank on March 10; and the Federal Reserve on March 16. Both central banks will be releasing revisions to their respective staff forecasts and economic projections, implicitly and explicitly outlining the path of future policies.

Over the next week-plus, while there are a number of significant economic data due, market participants will likely view everything from the central bank-centric point of view; that is, everything will be filtered through the lens of 'will this impact the ECB's easing prospects or the Fed's hike timeline?' Likewise, this probably means that March seasonality trends in both EUR-crosses and USD-pairs will only begin to exert their influence after mid-month.

In the meanwhile, perhaps the most interesting chart splashing across screens this morning is the daily Crude Oil chart (my interpretation seen below in chart 1). The potential for a bottom in Crude Oil exists, even if it's only in the short-term, even if it only leads to prices returning back to $40 from these levels (that would still be a move around +15%).

Chart 1: Crude Oil (USOIL) Daily Chart (December 2014 to March 2016)

crude oil daily chart

The implications of a short-term bottom in Crude Oil is clearest in the CAD-crosses, which are outlined and discussed in the video above. The relationship between Crude Oil and the Canadian Dollar remains very strong - in fact, the 60-day rolling correlation between CAD/USD (inverse USD/CAD) and Crude Oil is a statistically significant +0.67 (see chart 2 below).

We first outlined the potential for a turn in the Canadian Dollar in our January 22 article, "Oil Collapse Driven by Panic; Is CAD at a Policy Turning Point?" and for both short EUR/CAD and short GBP/CAD in the February 18 article, "Decision Time for Risk, USD-pairs; CAD-crosses at Inflection Points."

Chart 2: Inverse USD/CAD versus Crude Oil (January 2010 to March 2016)

USD/CAD versus crude oil

See the above video for an expanded discussion on the fundamental expectations for the ECB;s March 10 meeting, the Fed's March 16 meeting, and for the 'Brexit' saga, as well as for technical considerations in EUR/CAD, GBP/CAD, EUR/USD, GBP/USD, GBP/JPY, and the USDOLLAR Index.

Read more: EUR-crosses Slump as Bar for ECB Action is Lowered

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com.

Follow him on the DailyFX Real Time News feed, Twitter, and Stocktwits at @CVecchioFX.

To be added to Christopher’s e-mail distribution list, please fill out this form.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.