Market Update – March 21, 2017
The second part of March started with markets being still in a range as nothing the central banks say or do seem to move prices anymore. This month so far there were three main events that were supposed to bring volatility to the trading table: the European Central Bank (ECB) meeting, the Non-Farm Payrolls (NFP) in the United States and the Federal Reserve decision.
None of them was enough to break recent ranges. Despite the fact that the Fed did hike the rates, the dollar is not enjoying it. This may be because the decision was already priced in, in the sense that the communication was so clear that everyone knew the Fed will hike rates, and then when the actual hike came, the opposite happen: the dollar was sold instead of being bought.
It may be that market participants are still waiting for another reason until the next move unfolds. One thing is for sure: since Mr. Trump’s election, the market is ranging.
It may be too much to say that the market is ranging for almost four months now, but if you look at the daily time frame on most of the major pairs you’ll see this statement is correct. The EURUSD, while trading with a bullish tone, is not able to break higher, despite the fact that it is eyeing the 1.08 level now.
The USDCHF pair is trading around the parity level, with sellers pushing the pair below the level on any meaningful attempt to break higher. And even USDJPY is ranging on the daily chart.
When majors are ranging, chances are that the crosses will be in a range as well. This is true if you look at the EURJPY and EURGBP crosses. While they enjoyed a nice rally in February, time passed and more than half of those gains were retraced.
The other day marked the beginning of a new era. The United Kingdom has officially announced that on March 29, 2017, the now famous Article 50 will be triggered. For those that are unfamiliar with the subject, this is the official document that marks the break-up of the United Kingdom from the European Union.
Markets took it surprisingly well. Both the Euro and the Pound didn’t move on the news. However, expect this to change the more we find out more details about the next steps to come.
CPI in Canada and TLTRO in Eurozone should make this week a bit more volatile towards the end. Hopefully, ranges will be broken and we can all move on.
