Forex Market Update
This morning the greenback is trading higher against its major counterparts, amid growing optimism among investors regarding the US economic recovery in 2014 and amid the possibility of further tapering of asset purchases by the Fed in the coming months. The USD also rose, after the remarks from the US Federal Reserve’s (Fed) Chief that obstacles to the US economic recovery are slowly fading.
Additionally, the Fed’s regional Presidents from Richmond and Philadelphia, indicated that the central bank might bring in greater reductions in its asset purchases in its upcoming meetings, in light of the recent economic developments. Meanwhile, the Philadelphia Fed President, Charles Plosser, warned that the central bank may be forced to aggressively hike interest rates from their current levels. Investors have an action packed week with their plates filled with a lot of macroeconomic and fundamental fodder.
The Euro is trading in the green against the greenback, following the release of positive services PMI data for most of the Euro-zone economies. Additionally, an upbeat Euro-zone Sentix investor confidence report further added to signs of a steady economic recovery in the currency bloc.
The Sterling failed to held on to its previous gains, after the UK’s Chancellor’s Exchequer, George Osborne, warned that another spending cut of almost £25 billion is required to make up for the losses to the nation’s treasury due to the reduction in the taxes. The GBP also fell, after the final service PMI for December came in considerably short of the flash data estimate.
In the Asian trading hours, risk sentiment came under pressure, after growth in China's services sector slowed sharply in December, adding to signs of slowing momentum in the world's second-largest economy.
EUR USD
This morning at 10:40 GMT, the EUR is trading at 1.3617 against the USD, 0.10% higher from the New York close, following the release of largely upbeat European services PMI data. Additionally, the Euro-zone Sentix investor confidence index improved sharply in January to the highest since April 2011, strengthening the Euro-zone economy outlook by showing investors in the bloc are most bullish in almost two years. Investors would now keep a close tab on the release of Germany’s inflation report due later today. During the session, the pair traded at a high of 1.3619 and a low of 1.3571. On Friday, the EUR traded 0.29% lower against the USD in the New York session, and closed at 1.3603.
The pair is expected to find its first support at 1.3572 and first resistance at 1.3661.
GBP USD
At 10:40 GMT, the GBP is trading at 1.6378 against the USD, 0.30% lower from the New York close, after the UK’s Chancellor’s Exchequer, George Osborne, indicated that a spending cut is required to offset the consequences tax reductions. The Pound also came under pressure, after growth in Britain's services sector slowed unexpectedly in December, raising doubts about whether the pace of growth can be sustained in 2014. During the session, the pair traded at a high of 1.6418 and a low of 1.6337. On Friday, the British Pound traded tad higher versus the Dollar in the New York session, and closed at 1.6427.
The pair is expected to find its first support at 1.6318 and first resistance at 1.6457.
USD JPY
The USD is trading at 104.53 against the JPY at 10:40 GMT this morning, 0.06% higher from the New York close. The Yen traders are expected to track news emanating from Europe and the West, amid a light economic calendar during the week. During the session, the pair traded at a high of 104.96 and a low of 104.15. In the New York session on Friday, the USD traded slightly lower against the JPY, and closed at 104.47.
The pair is expected to find its first support at 104.13 and first resistance at 104.95.
USD CHF
This morning at 10:40 GMT, the USD is trading at 0.9039 against the Swiss Franc, marginally lower from the New York close, ahead of the Swiss unemployment and inflation data to be released later during the week. During the session, the pair traded at a high of 0.9068 and a low of 0.9038. In the New York session on Friday, the USD traded 0.27% higher against the CHF, and closed at 0.9043.
The pair is expected to find its first support at 0.9005 and first resistance at 0.9071.
USD CAD
At 10:40 GMT, the USD is trading at 1.0622 against the CAD, slightly higher from the New York close, ahead of the Canadian industrial product price data to be released later today. During the session, the pair traded at a high of 1.0642 and a low of 1.0608. On Friday, the USD traded modestly lower against the CAD in the New York session, and closed at 1.0618.
The pair is expected to find its first support at 1.0599 and first resistance at 1.0646.
AUD USD
The AUD is trading at 0.8964 against the USD, at 10:40 GMT this morning, 0.13% lower from the New York close, as yet another dismal macroeconomic report from China, indicated that the world's second-biggest economy is starting the new year sluggishly. The HSBC China services purchasing managers' index fell to 50.9 in December from 52.5 in November. During the session, the pair traded at a high of 0.8984 and a low of 0.8934. AUD traded 0.14% lower against the USD in the New York session, and closed at 0.8976.
The pair is expected to find its first support at 0.8930 and first resistance at 0.9003.
Gold
At 10:40 GMT, Gold is trading at $1238.04 per ounce, tad lower from the New York close, as weak services activity report from the yellow metal’s largest consumer, China, dampened the demand prospects for the gold. This morning, Gold traded at a high of $1246.46 and a low of $1233.15 per ounce. In the New York session on Friday, the yellow metal traded 0.58% higher, and closed at $1238.05.
Gold has its first support at $1227.94 and first resistance at $1247.30..
Silver
Silver is trading at $20.05 per ounce, 0.59% lower from the New York close, at 10:40 GMT this morning, after growth in China's services sector slowed sharply last month, raising concerns about the pace of recovery in the world's
second-largest economy. This morning, Silver traded at a high of $20.35 and a low of $19.97. Silver traded 0.06% lower against the USD in the New York session, and closed at $20.17.
Silver has its first support at $19.89 and first resistance at $20.28.
Crude Oil
At 10:40 GMT, Oil is trading at $94.48 per barrel, 0.20% higher from the New York close, as reports of a blast in the North Iraqi pipeline renewed the supply concerns of the crude oil. However, the gains were caped, amid weekend news that Libya has resumed its crude oil production at one of its oil field and might increase its output in the coming days. This morning, Oil traded at a high of $94.54 and a low of $93.91. On Friday, Oil traded 1.33% lower in the New York session, and closed at $94.25. The Energy Information Administration reported that the US crude oil stock pile dropped 7.0 million barrels for the week ended December 27.
It has its first support at $93.71 and first resistance at $95.41.
Economic Snapshot
UK services PMI declined unexpectedly in December
The services purchasing managers’ index (PMI) in UK fell to a reading of 58.8 in December, from a reading of 60.0 in the previous month. Market had expected the index to rise to a reading of 60.3 in December.
UK’s official reserves fell at slower pace in December
The official reserves in the UK dropped by $536.0 million in December, compared to a fall of $868.0 million reported in the previous month.
Euro-zone services PMI declined in line with flash estimate in December
The services PMI in the Euro-zone dropped to a level of 51.0 in December, in line with preliminary estimate of a level of 51.0 and compared to a level of 51.2 recorded in the previous month. The composite PMI rose to a level of 52.1 in December, from a level of 51.7 recorded in the previous month and in line with preliminary estimate of a level of 52.1.
Euro-zone Sentix investor confidence climbed more than expected in January
Sentix investor confidence in the Euro-zone rose to a level of 11.9 in January, compared to a reading of 8.0 reported in the previous month. Markets were expecting the index to increase to a reading of 9.3 in January.
German services PMI fell more than the preliminary estimate in December
German final services PMI declined to a level of 53.5 in December, lower than the preliminary estimate of a level of 54.0 and compared to a level of 55.7 recorded in November.
French final services PMI contracted less than preliminary estimate in December
France’s services PMI dropped to a level of 47.8 in December, from a level of 48.0 reported in November. France had reported a preliminary estimate of a level of 47.4 in December.
Italian services PMI advanced in December
The services PMI in Italy rose to a reading of 47.9 in December, compared to a reading of 47.2 reported in the previous month.
Spain services PMI expanded unexpectedly in December
Spain’s services PMI climbed to a level of 54.2 in December, compared to a level of 51.5 registered in the previous month.
China services sector activity dropped in December
Happy pips to all.
