G20 continued to emphasize the importance of free trade; UK CPI eases more than expected in February and the German ZEW Economic sentiment deteriorates sharply in March
In the G20 meeting that concluded yesterday, analysts at Deutsche Bank have noticed that most global finance chiefs warned against protectionism with BOJ Governor Kuroda noting “the G20 will continue to emphasize the importance of free trade” while France’s Finance Minister Le Maire reiterated that there will only be losers in a trade war and that EU members want a full exemption from US steel and aluminum tariffs. On the other side, a senior unnamed US Treasury official told Reuters that the President strongly believes in free trade, but “where the expectation is America totally subordinates its national interest for free trade, is just one we don’t accept” and that instead “we believe in free trade with reciprocal terms that leads to more balance trade relationships”. Earlier on, senior EU officials told Bloomberg that the US will grant waivers to tariffs provided the EU meet five conditions, including limiting exports of the two materials to the US and actively addressing China’s various trade distorting practices.
Furthermore, during the meeting, one of the key points discussed was the topic of cryptocurrencies. Namely, the countries in attendance have seen cryptocurrencies as an asset, not so much as a currency and noted that they lack the traits of sovereign currencies. France’s Bruno Le Marie and Brazil’s Ilan Goldfajn both noted, that cryptocurrencies are “more an asset than a currency”.
The important macroeconomic news coming from England yesterday was quite disappointing with all missing the forecast. The UK Consumer Prices Index (CPI) 12-month rate was 2.7% in February 2018, down from 3.0% in January 2018 and also lower than 2.8% anticipated, the UK Office for National Statistics (ONS) reported. Meanwhile, the core inflation gauge also ticked lower in Feb., coming in at +2.4 y-o-y, down from previous month’s reading of 2.7% and 2.5% expected. On monthly basis, the UK inflation rose 0.4% in Feb. vs. -0.5% last month and expectations of 0.5%. ONS reports: “The largest downward contributions to the change in the rate came from transport and food prices, which rose by less than a year ago.”
Following the missed estimates from the UK came the German ZEW economic sentiment that showed the economic sentiment numbers dropped more than expected, coming in at 5.1 versus 13.0 expectations and 17.8 seen last. While the sub-index current conditions figure eased to 90.7 vs. 90.0 expected and 92.3 booked previously. The low numbers have caused EUR/USD to trade on a weak note and has been trading in the negative territory, closer to the 1.2300 milestone.
The big highlight today is the FOMC meeting outcome at 6pm GMT. Shortly after that Fed Chair Powell will also deliver his first post-meeting press conference as Chair. Away from that it’s another fairly quiet day for data with January/February employment data and February public sector net borrowing data due in the UK, while in the US the Q4 current account balance and February existing home sales data will be released. -FXStreet
The EUR/USD pair fell from 1.2355 to 1.2240 on Tuesday, creating another lower high on the daily chart, courtesy of the disappointing German Zew survey and the drop in the bond yields across the Eurozone. Technically, the pair is bearish as in the 4 hours chart, it failed to sustain gains above its moving averages and now settled below all of them, with the 20 SMA accelerating south below the 100 and 200 SMAs. Technical indicators in the mentioned chart hold within bearish territory, with the RSI heading south at 36, but the Momentum lagging, still heading south below its 100 level. -FXStreet
The GBP/USD is flat ahead of the European market session, trading quietly above the 1.4010 area with Japanese markets dark to celebrate the Equinox holiday. The pair fell to a daily low of 1.3983, but managed to bounce to settle around the 1.4000 figure, maintaining a positive tone despite the intraday decline, as in the 4 hours chart, the pair met buying interest around a bullish 20 SMA, while the Momentum indicator bounced after approaching its mid-line as the RSI consolidates around 56. -FXStreet
The USD/JPY pair rose to 106.61 yesterday, possibly due to hawkish Fed expectations and a rise in the short-duration treasury yields. As of writing, the spot is flat-lined around 106.50. Tokyo markets are off, hence it has been a dull Asian session for the USD/JPY pair. In the meantime, the 4 hours chart shows that the pair is holding a couple of pips above a bearish 100 SMA, while technical indicators turned south within positive territory, leaning the scale toward the downside without confirming it just yet. The bearish potential will increase on renewed selling pressure below the 105.90 level, with scope then to extend its decline to 105.24, February’s low. -FXStreet
Gold dropped on Tuesday erasing yesterday’s gains. A stronger US Dollar ahead of the FOMC meeting pushed the yellow metal to the downside. -FXStreet
KEY ECONOMIC CALENDAR EVENTS FOR March 21st
GBP Average Earnings Index 3m/y
GBP Claimant Count Change
GBP Public Net Borrowing
GBP Unemployment Rate
USD Existing Home Sales
USD Crude Oil Inventories
USD FOMC Economic Projections
USD FOMC Statement
USD Federal Funds Rate
USD FOMC Press Conference
NZD RBNZ Rate Statement
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