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Week Ahead – Eurozone GDP and Yellen testimony to be main market drivers

Posted on February 5, 2016 at 12:36 pm GMT

It will be a relatively quiet week for the economic calendar in the next 7 days as many Asian markets will be closed for the Lunar New Year, including China. The Eurozone will see a number of key data releases that will include the first GDP readings for the fourth quarter of 2015. In the US, attention is likely to focus on Janet Yellen’s semi-annual testimony to Congress. German industrial production data will start the week on Monday, which will [..]

ECB, Bank of Japan may find it harder to push their currencies down

Posted on February 5, 2016 at 10:56 am GMT

The past couple of weeks’ events and price action have yielded some interesting insights with respect to the major currencies of the dollar, the yen and the euro. This relates particularly to the intentions and possible actions of the monetary authorities in the US, Japan and the Eurozone and how they could influence the respective exchange rates. Starting with the yen, the Bank of Japan surprised markets the previous week with its announcement of negative interest rates. The yen nosedived [..]

Asian Session – Dollar muted ahead of NFP; Gold at 3-month high

Posted on February 5, 2016 at 8:57 am GMT

The US dollar stuck near yesterday’s lows in Asian trading on Friday as investors maintain caution ahead of the January non-farm payroll numbers later today. The greenback has now given up all of its gains against the yen from last Friday when the Bank of Japan decided to cut interest rates to negative. The US currency was down at 116.80 yen in late Asian session. Comments from Cleveland Fed President Loretta Mester that it would be “premature to materially change” [..]

Technical Analysis – Eurostoxx index bearish in descending channel

Posted on February 5, 2016 at 7:55 am GMT

The EU50 index (Eurostoxx) has been falling in a descending channel since December 2015 from a high of 3522 points to a low of 2832 in January 2016. In mid-January 2016, the market fell to a key level at 2969 (which is the September 2015 low). After testing and pivoting at this level, there was a failed attempt to rise higher when meeting strong resistance at the 21-day moving average and the top of the channel line around the key [..]

BoE lowers growth and inflation outlook but downplays talk of rate cut

Posted on February 4, 2016 at 3:37 pm GMT

The Bank of England downgraded its projections for the UK economy in its latest quarterly inflation report. It also decided to keep interest rates unchanged at a record low of 0.5% as expected. However, in a surprise move, the MPC’s lone dissenter, Ian McCafferty, who had been voting for a quarter point rate hike since last August, voted to keep rates on hold at today’s meeting. In its February report, the Bank lowered its growth and inflation forecasts for 2016-2018 [..]

European Session – Dollar under more pressure after jobless claims, sterling rally halted after BoE

Posted on February 4, 2016 at 3:29 pm GMT

The US dollar weakened against most of its major counterparts except versus the British pound which was pressured by the Bank of England’s Inflation Report and the Governor’s press conference. The euro surged to its highest level since October against the greenback while the commodity-linked currencies also got a boost. The highlight of the day was the Bank of England meeting. While it was expected for the Bank to keep rates at 0.50% and QE unchanged, what surprised the markets [..]

Technical Analysis – USDCAD falls into the cloud on increased downside bias

Posted on February 4, 2016 at 10:53 am GMT

USDCAD declined to a 7-week low on Thursday, falling into the Ichimoku cloud and below the 50-day moving average for the first time since November 2015. The downside bias looks set to continue as RSI has dropped deeper below 50. However, with the stochastics stuck in oversold territory since the end of January, some degree of rebound or consolidation may be due in the near term. If the downside pressure continues, the pair is likely to find support at the [..]

Asian Session – Oil jumps 8% as dollar slumps to 3-month low

Posted on February 4, 2016 at 8:21 am GMT

The US dollar slumped by 1.5% on Wednesday following comments from New York Fed President William Dudley who warned of tightening financial conditions. Speaking in an interview with MNI, Dudley said if the worsening financial conditions are still in place by the March meeting, the Fed would have to take it in consideration. He added that any further increases in dollar’s value could have “significant consequences” for the health of the US economy. Ten-year US treasury yields dropped to near [..]

Technical Analysis – GBPUSD breaches key 1.45 level but rally fades

Posted on February 4, 2016 at 7:41 am GMT

GBPUSD broke above a key resistance level of 1.4500 on Wednesday to reach a one-month high of 1.4648. This is close to the 50% Fibonacci level of the retracement from 1.5238 to 1.4078 (December to January drop). This level lies at 1.4657. For a shift to a bullish bias, strong upside momentum is needed, otherwise the market may find it a challenge to break above this strong resistance level at the 50% Fibonacci. The recent rally could just be a [..]

European Session – Dollar under pressure on Fed’s Dudley and weak ISM non-manufacturing PMI

Posted on February 3, 2016 at 3:46 pm GMT

Sterling was one of the best performing major currencies against the dollar today, rallying to a three-week high on upbeat UK data. The UK services PMI index surprised to the upside in January to come in at 55.6 versus 55.5 in December. Most forecasts were for a dip to a reading of 55.4. The upbeat data helped lift the pound above the key psychological mark of $1.45. It was last at $1.4594. The main risk ahead for the British currency [..]

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