March 28th Morning Brief – U.S Consumer Confidence In Focus
Arslan Butt • 3 min read
Yesterday, the market mainly traded on the fundamentals that were released last week, specifically those released on Friday. Most of the fundamental traders feel hesitant to enter into a market in the absence of any major news. That’s why the volatility remained low throughout the Asian and European trading session, although buyers entered the market in the New York session.
I’m excited to share that our trading signals on Nikkei and AUD/USD closed in profit. Nikkei helped us secure nearly 68 pips. Not bad! In addition to this, our trade ideas that were shared in the weekly outlook are also yielding profits.
In the early Asian session, President Robert Kaplan, from the Federal Reserve Bank of Dallas, gave a speech which shared his stance on monetary policy. He didn't add anything new, and like most others, he used the non-binding word "if". He intends to support additional interest rate adjustments IF the U.S. economy extends progress. Thus, the U.S dollar had a muted impact from his speech. It's still trading bearish at $99, down -0.03% for the day.
Major Economic Events Today
- Goods Trade Balance (13:30)
- Prelim Wholesale Inventories m/m (13:30)
- S&P/CS Composite-20 HPI y/y (14:00)
- CB Consumer Confidence (15:00)
- Richmond Manufacturing Index (15:00)
- FOMC Member Kaplan Speaks (18:00)
- BOC Gov Poloz Speaks (15:10)
The above economic events are now on a monitor list but CB Consumer Confidence, specifically, is on my radar. Since November’s Presidential elections, U.S consumer confidence has remained strong despite dull retail sale figures. It will be closely monitored by investors to determine further trends and it has the potential to cause volatility in the market today.
USD/JPY – The Safe Haven Currency Pair
The Japanese Yen is still in demand due to its increased safe-haven appeal as the ongoing tensions around the globe continuously weigh on global stock markets. Particularly, Article 50 of the Lisbon Treaty is forcing investors to stay out of the market in order to avoid uncertainty. By the way, Article 50 will be triggered tomorrow, on the 29th of March.
USDJPY Hourly Chart
As seen in the hourly chart, the USD/JPY moved upside to complete the 50% Fibonacci retracement at $110.808. The pair failed to close above the 50 periods EMA. For us, it's a signal that investors are still trading with a bearish bias and the pullback was merely a retracement rather than a reversal. In the same timeframe (H1), the RSI is showing a crossover which demonstrates a bearish trend in the market.
Trading Signal: Below $110.755, the USD/JPY has a potential to go for $110.185. So, I recommend entering sell positions below $110.755.
USD/CAD, The Commodity Currency
The Loonie is exhibiting instability for the 4th consecutive trading day, whereas, the USD/CAD has gained more than 60 pips, trading at 1.3380. It's the only currency, after the Aussie, that remained weaker against a weaker dollar. As we know, there is a strong positive correlation between the Canadian dollar and Crude Oil. This is the major reason for the weaker Canadian dollar.
Today, investors will be focusing on BOC Gov Poloz Speaks due at 15:10 GMT.
USDCAD Hourly Chart
Honestly, I can't see any clear trend in the USD/CAD. However, let me share the intra-day trading levels for the pair. At the moment, the pair is trading at $1.3380, right above 50 periods EMA. The RSI (above 56) is signaling a bullish bias for the pair.
In my opinion, it's not the right time to enter a buy position, because of a double top pattern in the 4 – hour timeframe, which is providing resistance at $1.3403,
Trading Signal: Investors are recommended to buy only above $1.3410 with a take profit at $1.3465 and a stop loss below $1.3365.
I would recommend closely monitoring the Consumer Confidence figures from the United States as it is likely to give us breakouts and fakeouts as well. Keep in mind, Article 50 is triggered tomorrow, so it’s better to play safe with tight stop loss. Happy trading!