Forex Market Update
Safe haven buying has been the theme of today’s morning session, as jitters of economical woes in the emerging markets weighed on risk appetite of the investors. Moreover, demand for the USD also found support after the policy makers of US central bank unanimously voted to further decelerate the pace of its bond purchases to $ 65 billion.
The central bank also cautioned about the persistently low levels of inflation which might endanger the economic performance in the nation. However, it further stated that economic growth in the country has improved in the recent quarter and labor market also showed signs of improvements. Against this backdrop, market participants would keep a close eye on the release of US gross domestic product and the initial jobless claims data, to confirm the views of the central bank.
The Euro is trading in red against the USD, following the release of an uninspiring domestic macroeconomic data from the Euro-zone. However, the German unemployment declined more than expected in January, highlighting strength in the nation’s economy.
The Sterling is trading in the red against the USD. The Bank of England (BoE) Governor, Mark Carney, yesterday opined that there still remains a significant time frame before which the central bank can raise the interest rates.
Meanwhile, a contraction in manufacturing activity in China, the first in six months, added to signs of economic slowdown in the world’s second largest economy.
EUR USD
This morning at 10:40 GMT, the EUR is trading at 1.3594 against the USD, 0.51% lower from the New York close, as risk aversion increased among investors after data showed the Chinese manufacturing sector contracted more than expected in January and the US Federal Reserve further tapered its asset purchases. Disappointing economic sentiment data from the Euro-zone also weighed on the shared currency. During the session, the pair traded at a high of 1.3666 and a low of 1.3585. Yesterday, the EUR traded 0.18% higher against the USD in the New York session, and closed at 1.3663.
The pair is expected to find its first support at 1.3558 and first resistance at 1.3656.
GBP USD
At 10:40 GMT, the GBP is trading at 1.6449 against the USD, 0.69% lower from the New York close. In economic news, December mortgage approvals in the UK increased the highest in almost 6 years. Meanwhile, consumer credit reduced in the similar period. During the session, the pair traded at a high of 1.6568 and a low of 1.6445. Yesterday, the British Pound traded marginally higher versus the Dollar in the New York session, and closed at 1.6564. The BoE Governor, Mark Carney, stated that the central bank still has substantial time before it would consider hiking the interest rates.
The pair is expected to find its first support at 1.6399 and first resistance at 1.6546.
USD JPY
The USD is trading at 102.35 against the JPY at 10:40 GMT this morning, 0.06% higher from the New York close. Data released overnight revealed that the Japanese retail trade rose at a slower pace in December. Traders would now await for consumer prices, industrial production and employment data from Japan set to release early tomorrow. During the session, the pair traded at a high of 102.55 and a low of 102.08. In the New York session yesterday, the USD traded 0.35% lower against the JPY, and closed at 102.30.
The pair is expected to find its first support at 101.84 and first resistance at 102.86.
USD CHF
This morning at 10:40 GMT, the USD is trading at 0.8997 against the Swiss Franc, 0.57% higher from the New York close. On the data front, the Swiss KOF leading indicator rose at a slower-than-expected pace in January. During the session, the pair traded at a high of 0.8999 and a low of 0.8941. In the New York session yesterday, the USD traded 0.49% lower against the CHF, and closed at 0.8946.
The pair is expected to find its first support at 0.8951 and first resistance at 0.9027.
USD CAD
At 10:40 GMT, the USD is trading at 1.1177 against the CAD, slightly higher from the New York close. Amid lack of economic data from Canada, the pair would take cues from fourth quarter GDP data from the US. Furthermore, initial jobless claims report will be keenly eyed ahead of next week’s non-farm payrolls data. Tomorrow’s Canadian GDP figures would also likely grab attention by traders. During the session, the pair traded at a high of 1.1200 and a low of 1.1164. Yesterday, the USD traded 0.14% higher against the CAD in the New York session, and closed at 1.1172.
The pair is expected to find its first support at 1.1119 and first resistance at 1.1218.
AUD USD
The AUD is trading at 0.8739 against the USD, at 10:40 GMT this morning, tad lower from the New York close, after Australian new home sales dropped in December. Disappointing January manufacturing data in China, Australia’s largest trading partner, also weighed on the Aussie. The Aussie also came under pressure after the Fed decided to taper its monthly asset purchases by further $10 billion to $65 billion yesterday. During the session, the pair traded at a high of 0.8758 and a low of 0.8709. AUD traded 0.15% lower against the USD in the New York session, and closed at 0.8742.
The pair is expected to find its first support at 0.8706 and first resistance at 0.8776.
Gold
At 10:40 GMT, Gold is trading at $1255.05 per ounce, 1.00% lower from the New York close, as Federal Reserve’s move to further reduce the size of its bullion friendly asset purchase policy weighed on the yellow metal, offsetting safe-haven bids led by jitters in the emerging markets. This morning, Gold traded at a high of $1272.92 and a low of $1253.04 per ounce. In the New York session yesterday, the yellow metal traded 0.41% higher, and closed at $1267.72
Gold has its first support at $1247.75 and first resistance at $1267.63.
Silver
Silver is trading at $19.44 per ounce, 1.51% lower from the New York close, at 10:40 GMT this morning, as the greenback was supported following the US Fed’s decision to further revise the pace of its bond purchases. This morning, Silver traded at a high of $19.81 and a low of $19.3. Silver traded 0.07% higher against the USD in the New York session, and closed at $19.74.
Silver has its first support at $19.17 and first resistance at $19.85.
Crude Oil
At 10:40 GMT, Oil is trading at $97.92 per barrel, 0.50% higher from the New York close, as severe climatic conditions in the US improved the demand prospects for the crude oil. This morning, Oil traded at a high of $97.97 and a low of $97.33. Yesterday, Oil traded 0.24% higher in the New York session, and closed at $97.46. The Energy Information Administration has reported that the US crude oil inventories rose 6.4 million barrels for the week ended January 24.
It has its first support at $96.84 and first resistance at $98.49.
Economic Snapshot
Mortgage approvals in the UK rise less than forecast in December
The number of mortgage approvals in UK increased to a level of 71.6K in December, lower than market expectations of a level of 72.9K and following a 70.8K mortgage approvals reported in the previous month.
UK net consumer credit advanced less than expectations in December
The UK’s net consumer credit increased by £0.6 billion in December, following a revised rise of £0.7 billion recorded in the preceding month. Markets were expecting net consumer credit to rise by £0.7 billion in December. Meanwhile, net lending to individuals in the UK climbed by £2.3 billion in December, following an increase of £1.5 billion recorded in the preceding month.
Euro-zone’s industrial confidence dropped unexpectedly in January
The industrial confidence in the Euro-zone dropped to a level of -3.9 in January, against a reading of -3.4 reported in the preceding month, compared to a market estimate of a rise to a level of -2.9. Meanwhile, economic sentiment indicator in the Euro-zone rose to a level of 100.9 in January, following an upwardly revised reading of 100.4 reported in the preceding month. The final consumer confidence in the Euro-zone rose to a level of -11.7 in January, compared to a level of -13.5 reported in the previous month. Services sentiment indicator in the Euro-zone climbed to a level of 2.3 in January, compared to an upwardly revised reading of 0.4 reported in the previous month.
German unemployment rate remained steady in January
On a seasonally adjusted basis, the unemployment rate in Germany remained unchanged at 6.8% in January, compared to the previous month. Markets were expecting the unemployment rate to rise to 6.9% in January. Meanwhile, the number of people unemployed in Germany fell by 28.0K in January, more than market expectations and compared to a revised drop of 19.0K reported in the previous month.
Spain GDP climbed in line with market consensus in Q4 2013
On a quarterly basis, the preliminary gross domestic product (GDP) in Spain rose 0.3% in Q4 2013, in line with market estimates and compared to a rise of 0.1% recorded in the previous quarter.
KOF Leading Indicator in Switzerland advanced less than forecasts in January
The KOF leading indicator in Switzerland rose to a level of 1.98 in January, lower than market expectations of a level of 2.00 and compared to a reading of 1.95 reported in the preceding month.
Australia HIA new home sales dropped in December
On a monthly basis, new home sales in Australia dropped 0.4% in December, compared to a 7.5% rise in the previous month.
China Markit manufacturing PMI fell more than the preliminary estimate in January
Happy pips.
