Article Highlights

  • U.S. February headline PPI up 0.3% vs. 0.1% forecast
  • U.S. February core PPI up 0.3% vs. 0.2% forecast
  • U.K. CB leading index up 0.4% vs. 0.1% previous
  • French Presidential candidate Fillion under formal investigation
  • New Zealand current account deficit narrowed from 5.03B NZD to 2.34B NZD
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The Greenback seems to be warming up for the FOMC announcement this week, as it edged slightly higher against its peers on upbeat inflation data.

Major Events:

Upbeat U.S. PPI readings – All green for Uncle Sam! Even though expectations are already running pretty high for an FOMC interest rate hike this week, the freshly released PPI reports managed to bump it up a notch as the readings came in better than expected.

Headline PPI showed a 0.3% gain versus the projected 0.1% uptick while the core reading printed a 0.3% increase versus the estimated 0.2% rise. Components of the report revealed that majority of the gains came from a 0.4% pickup in final demand services, which includes trade, transportation, and warehousing activity.

Crude oil updates – Black Crack paused from its slide on reports that Saudi Arabia’s increase in production over the past few months actually went into domestic storage and local refineries rather than being sold in the market. This confirms that the OPEC’s top oil producer remains committed to their output deal, keeping everyone else in line.

Over in Russia, oil production was down 179K barrels since October last year at a rate of 11.08 million barrels per day in output last week. However, this is still short of the promised 200K barrels in production cuts for the first quarter of 2017 and is a ways to go before the proposed 300K reduction for the second quarter.

According to the American Petroleum Institute, U.S. oil stockpiles retreated by 0.5 million barrels last week, following consecutive weekly gains reported by the Energy Information Administration that triggered a sharp selloff.

European elections heating up – Political headlines are sneaking their way back to the driver’s seat in terms of euro price action, as investors are now turning their attention to the upcoming elections in the Netherlands and developments in France.

Not much risk to economic stability is expected from the polls in Netherlands, but the uncertainty and change in political leadership is still expected to keep the shared currency’s gains in check for the meantime. This election is also considered a test of far-right populism in the country, setting the tone for the kind of coalition that will run government in the next few years. Anti-Islam politician Geert Wilders seems slated to gain more seats in parliament with his Eurosceptic platform so issues on immigration and EU membership are also on the line.

Meanwhile in France, opinion polls are showing a lead for Le Pen versus Macron in the first round, which means that “Frexit” concerns aren’t completely out the window just yet. To top it off, presidential candidate Francois Fillon was placed under formal investigation over alleged diversion of public funds, dampening his chances of winning the elections.

Major Market Movers:

EUR & GBP –  Resurfacing political uncertainties in the European region forced the euro and the pound to retreat against their forex counterparts.

EUR/USD slipped from 1.0639 to a low of 1.0600, EUR/JPY is down from 122.51 to 121.63, and EUR/GBP is down from .8767 to .8723. GBP/USD fell to a low of 1.2108 but recovered to 1.2171 later on, GBP/JPY is down from 139.60 to a low of 139.17, and GBP/CAD slid below the 1.6400 mark.

Watch Out For:

  • 4:30 am GMT: Japanese revised industrial production

See also:

London Session Recap

Asian Session Recap

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