Market Drivers February 08, 2017
Europe and Asia
No Data
North America
CAD: Housing Starts 8:15
NZD: Cash Rate 3:00
It's been an extraordinarily quiet night of trade in FX with pairs contained to very narrow ranges as the buck was slightly higher against the euro and pound but lower against the yen.
The economic calendar in G-7 was essentially barren and in North America the market will only get a look at the Canadian building permits data suggesting that trading will have to be driven by other factors. Cable remained relatively well bid after climbing nearly two big figures in a highly volatile North American session yesterday after an MPC member suggested that UK rates may have to rise sooner than expected.
The focus in UK will soon shift to proceedings in the Parliament as PM May readies for an official vote on the triggering of Article 50, but for now the hawkish talk has certainly helped cable reverse its flows.
With majors essentially treading water, focus later in the day may turn to commodity dollars. On the oil front, crude continues to slide, trading lower by 50 cents overnight as it broke below the $52 handle. Despite confirmation that OPEC members are cooperating over the new quota, prices are in danger of sliding below the key $50/bbl level.
Yesterday, analysts from Goldman Sachs pointed out the troubling trend in gasoline demand which has plunged markedly this year perhaps suggesting that the US consumer is less healthy than the market thinks. If that's indeed the case, the decline in the greenback could resume with a vengeance if traders begin to reassess the prospect of further tightening by the Fed. USD/CAD was very strong yesterday, but so far is not following crude as it trades at 1.3158.
Later today the RBNZ will announce its rate policy decision with the market universally convinced that rates will remain on hold. The question is whether the New Zealand central bank will tilt its bias slightly to the hawkish side after remaining neutral for quite some time. The data from New Zealand has been mixed with labor numbers disappointing but dairy auction registering its third positive gains in a row. If RBNZ tilts even slightly more hawkish the kiwi pair could pop to the long term resistance level of .7400.