Forex Market Update
This morning, the greenback continues to trade higher, supported by the US Federal Reserve’s (Fed) decision to decelerate the momentum of its monthly bond purchases. Ahead in the day, investors would keenly await GDP report from the US.
However, data released yesterday painted a gloomy picture for some sectors of the US economy. The weekly jobless benefits touched multi week highs in the past week. Meanwhile, existing home sales dropped more than market expectations in November and manufacturing activity in Philadelphia deteriorated in December.
The seventeen nation shared currency, the Euro, inched downwards against the USD and the GBP, after the Standard & Poor’s (S&P) trimmed its sovereign rating for the common currency bloc by one notch to ‘AA+’, citing the contentious budgetary negotiations of the bloc. However, the improvement in the German consumer confidence data provided some relief to the downfall in the Euro.
The UK’s economy continued to experience a robust recovery, after the nation’s third quarter gross domestic product (GDP) depicted a better than expected growth in the nation. To add to the positive tone, the S&P rating agency reaffirmed its ‘AAA’ rating for the UK economy. However, the consumer confidence in the nation failed to improve in December.
The Bank of Japan left its monetary stance unchanged at its monetary policy meeting. However, it also cautioned markets that any hike in the sales tax might hamper demand in the nation.
The Aussie strengthened, after the People’s Bank of China (PBoC) yesterday announced that it would inject an unspecified amount of liquidity into the money markets.
EUR USD
This morning at 10:40 GMT, the EUR is trading at 1.3663 against the USD, tad higher from the New York close. Earlier in the day, the Euro weakened, following reports that the ratings agency, Standard & Poor’s downgraded its sovereign rating for the Euro-region, citing weakening of the credit worthiness of the member nations. Moreover, the dollar also remained supported following the Fed’s monetary policy decision. In economic news, consumer confidence in Germany improved in January. During the session, the pair traded at a high of 1.3668 and a low of 1.3625. Yesterday, the EUR traded mostly unchanged against the USD in the New York session, and closed at 1.3662.
The pair is expected to find its first support at 1.3629 and first resistance at 1.3694.
GBP USD
At 10:40 GMT, the GBP is trading at 1.6337 against the USD, 0.18% lower from the New York close, after the consumer confidence in the UK deteriorated unexpectedly in December. However, losses were capped as the UK’s GDP report showed that the growth in the UK improved in the third quarter. Meanwhile, the S&P rating agency affirmed its sovereign rating for the UK. During the session, the pair traded at a high of 1.6375 and a low of 1.6319. Yesterday, the British Pound traded tad higher versus the Dollar in the New York session, and closed at 1.6367.
The pair is expected to find its first support at 1.6307 and first resistance at 1.6380.
USD JPY
The USD is trading at 104.43 against the JPY at 10:40 GMT this morning, 0.14% higher from the New York close. The BoJ kept its asset purchase program intact at its policy meeting this morning. However, it cautioned that the hike in the sales tax might endanger the demand in the nation. During the session, the pair traded at a high of 104.61 and a low of 104.21. In the New York session yesterday, the USD traded tad lower against the JPY, and closed at 104.27.
The pair is expected to find its first support at 104.08 and first resistance at 104.70.
USD CHF
This morning at 10:40 GMT, the USD is trading at 0.8975 against the Swiss Franc, marginally lower from the New York close. During the session, the pair traded at a high of 0.9003 and a low of 0.8972. In the New York session yesterday, the USD traded 0.08% higher against the CHF, and closed at 0.8977. The Swiss National Bank in its quarterly bulletin reiterated the currency ceiling against the Euro, citing that the Swissy still remains overvalued.
The pair is expected to find its first support at 0.8944 and first resistance at 0.9005.
USD CAD
At 10:40 GMT, the USD is trading at 1.0667 against the CAD, slightly higher from the New York close, ahead of the Canadian retail sales and inflation data to be released later today. During the session, the pair traded at a high of 1.0684 and a low of 1.0659. Yesterday, the USD traded 0.56% lower against the CAD in the New York session, and closed at 1.0663.
The pair is expected to find its first support at 1.0642 and first resistance at 1.0708.
AUD USD
The AUD is trading at 0.8873 against the USD, at 10:40 GMT this morning, 0.10% higher from the New York close. During the session, the pair traded at a high of 0.8890 and a low of 0.8855. AUD traded 0.10% higher against the USD in the New York session, and closed at 0.8864.
The pair is expected to find its first support at 0.8841 and first resistance at 0.8898.
Gold
At 10:40 GMT, Gold is trading at $1195.54 per ounce, 0.58% higher from the New York close, reversing its direction from the previous session’s losses, amid bargain hunting. This morning, Gold traded at a high of $1199.13 and a low of $1187.13 per ounce. In the New York session yesterday, the yellow metal traded 1.42% lower, and closed at $1188.70.
Gold has its first support at $1185.05 and first resistance at $1208.12.
Silver
Silver is trading at $19.38 per ounce, 0.72% higher from the New York close, at 10:40 GMT this morning, tracking gains in gold prices. This morning, Silver traded at a high of $19.43 and a low of $19.00. Silver traded 0.25% lower against the USD in the New York session, and closed at $19.24.
Silver has its first support at $19.11 and first resistance at $19.54.
Crude Oil
At 04:50 GMT, Oil is trading at $98.83 per barrel, 0.10% higher from the New York close. This morning, Oil traded at a high of $99.04 and a low of $98.65. Yesterday, Oil traded 0.56% higher in the New York session, and closed at $98.72.
It has its first support at $97.96 and first resistance at $99.60.
Economic Snapshot
UK index of services climbed at a slower pace in October
On a monthly basis, index of services in UK increased 0.1% in October, against a 0.2% rise in the previous month. On a quarterly basis, index of services in UK rose 0.8% for the period of October to December 2013, in line with revised reading of 0.8% recorded in the previous three months.
UK economy grew in line with estimates in the third quarter of 2013
On a quarterly basis, GDP in UK increased 0.8% in Q3, in line with the previous estimate and compared to an upwardly revised 0.8% growth recorded in the previous quarter. Meanwhile, on a quarterly basis, total business investment in UK rose by 2.0% in Q3, after a 2.7% decline reported in the previous quarter, and more compared the preliminary estimate of a rise of 1.4.
UK public sector borrowings advanced more than expected in November
Public sector net borrowing in the UK rose to a level of £14.8 billion in November, more than market expectation of a level of £13.4 billion and compared to a revised reading of £7.4 billion reported in the previous month. Meanwhile, the UK posted a public sector net cash requirement (PSNCR) surplus of £0.4 billion in November, from a downwardly revised deficit of £16.9 billion in the previous month.
UK current account widened more than expected in Q3
The current account deficit of the UK widened to £20.7 billion in Q3, from a revised deficit of £6.2 billion recorded in the previous quarter. Market had expected the UK’s current account deficit to widen to £14.0 billion in Q3.
UK Gfk consumer confidence deteriorated unexpectedly in December
GfK consumer confidence in the UK dropped to a level of -13.0 in December, compared to a reading of -12.0 reported in the previous month. Markets had expected the UK consumer confidence to improve to -11.0 in December.
Germany’s PPI dropped in line with expectations in November
On a monthly basis the producer price index (PPI) in Germany fell 0.1% in November, in line with market estimates and compared to a 0.2% decline recorded in the previous month. On an annual basis, producer price index in Germany fell 0.8% in November, following a 0.7% fall posted in the previous month.
German Gfk consumer confidence rose more than estimates in January
GfK consumer confidence index in Germany rose to a reading of 7.6 in January, higher than market expectation of a level of 7.4 and compared to a reading of 7.4 reported in the previous month.
French business confidence deteriorated in December
Industrial business climate in France fell to 94.0 in December, lower than market expectations of a level of 99.0 and compared to a reading of 95.0 reported in the previous month. The production outlook indicator in France narrowed to a level of -11.0 in December, compared to a downwardly revised reading of -17.0 reported in the previous month. Additionally, the own-company production outlook in France rose to a level of 5.0 in December, compared to reading of 1.0 recorded in the previous month.
Italian industrial sales dropped in October
On a seasonally adjusted monthly basis, industrial sales in Italy dropped 0.7% in October, following an increase of 0.1% recorded in the preceding month.
Italian retail sales dropped at a slower pace in October
On a monthly basis, the retail sales in Italy declined 0.1% in October, following a drop of 0.3% recorded in the preceding month.
BoJ held its monetary policy steady
The Bank of Japan (BoJ) left its benchmark interest rate unchanged at 0.10%, in line with market expectations and maintained its asset purchase program.
