Forex Market Update
The US Dollar welcomed the New Year on a positive note, as a slower rise in the Chinese manufacturing purchasing managers’ index (PMI) induced investors to embrace the safe haven currency. Also, the last batch of macroeconomic updates from the US in 2013 left the greenback trade in the green. The consumer confidence in the US stood firm above the three months level in December, mainly on the back of encouraging macroeconomic and political developments. Furthermore, the S&P/Case-Shiller housing market report showed that home prices in the US climbed at the fastest pace in over seven years in October.
Traders will closely watch US weekly jobless claims and the ISM’s index of national factory activity later today for indications of the strength of the US recovery.
On the data front, the Euro-zone's manufacturing sector expanded for a third straight month in December, despite further weakness in France. Market participants also cheered the better than expected readings in the manufacturing activity in Germany. In a key development, Latvia began the New Year by joining the Euro-zone, becoming the 18th member of the group of EU states which uses the euro as its currency.
The uptick in the UK Pound took a halt as manufacturing activity in the nation rose less than anticipated in December. Meanwhile, the UK’s Prime Minister David Cameroon pledged to introduce a five-part plan to help nation recover further in 2014. However, he also cautioned that economic recovery in the UK still remains fragile.
The Australian Dollar fell after Chinese manufacturing data underscored the view that the world's second-largest economy lost some momentum in late 2013.
EUR USD
This morning at 10:40 GMT, the EUR is trading at 1.3723 against the USD, 0.23% lower from the New York close, despite encouraging readings in the manufacturing gauges across the Euro-zone. Moreover, risk off sentiment was also triggered following weaker than expected Chinese manufacturing PMI data for December, adding to the common currency’s woes. During the session, the pair traded at a high of 1.3777 and a low of 1.3715. Yesterday, the EUR traded 0.06% higher against the USD in the New York session, and closed at 1.3755.
The pair is expected to find its first support at 1.3700 and first resistance at 1.3762.
GBP USD
At 10:40 GMT, the GBP is trading at 1.6553 against the USD, 0.10% lower from the New York close, as the UK’s manufacturing PMI slowed more than market expectations in December. Moreover, British Prime Minister, David Cameron, in a New Year message warned that Britain's economic recovery is “real” but remains “fragile”. He laid out a five-part plan to drive the recovery and indicated to focus on cutting the deficit and taxes, creating new jobs, capping welfare benefits, curbing immigration and making education as a priority. During the session, the pair traded at a high of 1.6604 and a low of 1.6539. Yesterday, the British Pound traded 0.14% higher versus the Dollar in the New York session, and closed at 1.6569.
The pair is expected to find its first support at 1.6522 and first resistance at 1.6594.
USD JPY
The USD is trading at 105.34 against the JPY at 10:40 GMT this morning, tad higher from the New York close. During the session, the pair traded at a high of 105.42 and a low of 105.23. In the New York session yesterday, the USD traded 0.05% higher against the JPY, and closed at 105.33.
The pair is expected to find its first support at 105.20 and first resistance at 105.46.
USD CHF
This morning at 10:40 GMT, the USD is trading at 0.8977 against the Swiss Franc, 0.65% higher from the New York close, ahead of the Swiss leading indicator and manufacturing PMI data to be released later tomorrow. During the session, the pair traded at a high of 0.8982 and a low of 0.8906. In the New York session yesterday, the USD traded 0.11% lower against the CHF, and closed at 0.8919.
The pair is expected to find its first support at 0.8928 and first resistance at 0.9004.
USD CAD
At 10:40 GMT, the USD is trading at 1.0633 against the CAD, marginally higher from the New York close. In the absence of any major macroeconomic updates from Canada, the Loonie traders would track the news flowing from the US. During the session, the pair traded at a high of 1.0659 and a low of 1.0624. Yesterday, the USD traded 0.11% higher against the CAD in the New York session, and closed at 1.0631.
The pair is expected to find its first support at 1.0614 and first resistance at 1.0655.
AUD USD
The AUD is trading at 0.8885 against the USD, at 10:40 GMT this morning, slightly lower from the New York close, as a slowdown in the manufacturing activity in the major trading partner of the nation, China, dampened the trading prospects between the two nations. In economic news, a survey published by Australian Industry Group revealed that the headline performance of manufacturing index fell to a reading of 47.6 in December from 47.7 in November. During the session, the pair traded at a high of 0.8931 and a low of 0.8880. AUD traded 0.40% lower against the USD in the New York session, and closed at 0.8887.
The pair is expected to find its first support at 0.8866 and first resistance at 0.8917.
Gold
At 10:40 GMT, Gold is trading at $1221.46 per ounce, 1.35% higher from the New York close, as bargain hunters resurfaced after prices plunged to a six-month low. However, optimism over the global economic outlook and the imminent end of the US Federal Reserve's monetary stimulus capped gains. This morning, Gold traded at a high of $1229.95 and a low of $1203.13 per ounce.
Gold has its first support at $1204.92 and first resistance at $1233.97.
Silver
Silver is trading at $20.01 per ounce, 2.84% higher from the New York close, at 10:40 GMT this morning, in line with gains in gold prices. This morning, Silver traded at a high of $20.04 and a low of $19.93.
Silver has its first support at $19.43 and first resistance at $20.52.
Crude Oil
At 10:40 GMT, Oil is trading at $98.77 per barrel, 0.40% higher from the New York close, after the American Petroleum Institute reported a drop of 5.67 million barrels in the US crude oil stock piles for the week ended 27 December. However, disappointing growth in factory activity in second largest oil consumer, China, hold back further gains in oil prices. This morning, Oil traded at a high of $98.97 and a low of $98.50.
It has its first support at $98.47 and first resistance at $99.02.
Economic Snapshot
UK manufacturing PMI dropped more than anticipated in December
The manufacturing purchasing managers’ index (PMI) in UK dropped to a reading of 57.3 in December, compared to a revised reading of 58.1 reported in the preceding month.
Euro-zone final manufacturing PMI rose in line with preliminary estimate in December
The final manufacturing PMI in the Euro-zone increased to a reading of 52.7 in December, in line with preliminary estimate of 52.7 and following a reading of 51.6 reported in the previous month.
Germany final manufacturing PMI expanded more than the flash estimate in December
The final manufacturing PMI in Germany rose to a reading of 54.3 in December, from a level of 52.7 in the previous month and more than the flash estimate of 54.2.
French final manufacturing PMI declined less than the flash estimate in December
The final manufacturing PMI in France dropped to a reading of 47.0 in December, more than the preliminary estimate of a level of 47.1 and following a reading of 48.4 recorded in the previous month.
Italian manufacturing PMI advanced more than expected in December
The manufacturing PMI in Italy rose to a level of 53.3 in December, from a reading of 51.4 recorded in the previous month. Markets were expecting the index to increase to a reading of 51.7 in December.
Spanish manufacturing activity surprisingly expanded in December
Markit Economics reported that the manufacturing PMI in Spain rose unexpectedly to a reading of 50.8 in December, compared to a reading of 48.6 reported in the previous month. Markets were expecting Spain’s manufacturing PMI to rise to a level of 49.8 in December.
Australia’s RBA commodity price index climbed in December
The Reserve Bank of Australia (RBA) commodity price index in Australian dollar terms stood at 92.1 in December, compared to a downwardly revised 89.1 reported in the previous month. On an annual basis, the RBA commodity index in SDR terms in Australia dropped 4.0% in December, compared to a downwardly revised 2.8% decrease in the previous month.
Chinese Markit manufacturing PMI fell in line with the preliminary estimates in December
