The first week of 2017 saw some expected profit taking on the greenback with the FOMC meeting minutes and the December non-farm payrolls as the major news for the week. As per the minutes from the December Fed meeting future rate hikes remain data dependent as the Fed continue to keep a close eye on inflation moving towards the 2% target and maximum employment in the labor market. On Friday the NFP headline number came in lower than forecast with November revised from 178K to 204K and a massive rise in wage inflation (average hourly earnings) coming in at 0.4% vs -0.1% in November. Next week we have a lot of Fed speakers in an otherwise quiet week news wise, until Friday when we get PPI and retail sales for December.

FOMC Voters Change for 2017
With the start of a new year comes a rotation of Fed presidents which is important as these new members are voting members and so its important we keep an eye on them for upcoming rate meetings and speeches. It is also important to know the balance between hawks and doves as this will determine how many members are looking to raise rates quickly and how many want to wait and take it slow. According to the below data the board is losing three hawks with all replacements being doves except for Kashkari who’s score is unknown at this time. Looks like the path ahead is going to be a slow and steady one.

James Bullard, St. Louis Hawk
Esther L. George, Kansas City Hawk,
Loretta J. Mester, Cleveland Hawk and
Eric Rosengren, Boston Dove

Charles L. Evans, Chicago Dove,
Patrick Harker, Philadelphia Dove,
Robert S. Kaplan, Dallas Dove and
Neel Kashkari, Minneapolis Unknown.

USDollar Daily

Price opened just above MM3 with the Dollar moving lower due to profit taking though closing above the trend line drawn off of Mar '15, Apr '15, Jan '16 and Feb '16 after bulls bought between MPP and MM2. Price is currently at the 50% Fib of the recent bearish move. Support is eyed at MM2, MM1 and in the green zone just above MS2. Resistance is eyed at market and at the 61.8% and 78.6%/ MM3 a little higher up. The bear target for the month is MM1.

US10Y Daily

Price opened in the bull zone between MM2 and MPP, broke through the 21 EMA and found resistance at the daily 55. The daily stoch has crossed over and does indicate price moving lower for the next week which would mean a rise in yield and a possibly stronger USDollar and weaker Yen. The bull target for the month is MM4 with support eyed at MPP/ 21 EMA, the 61.8% fib of the bullish move or a double bottom (based on 55 MA theory). Should the 10Y move higher the yield will drop which could result in USDollar weakness and Yen strength.

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