FOREXYARD: Daily Forex Analysis
USD
The flow of positive macroeconomic data from the US does not appear to have an end in sight and yesterday it was the Initial Jobless claims that beat expectations at 299K, 25K above analyst consensus. The USD continued strengthening against most counterparts following the release, a trend that started a short while previously as a reaction to the European Central Bank Governor Trichet's speech (more on that in our EUR section). The sole gainer against the dollar yesterday was the GBP, which traded as high as 1.9535 following a surprising rate hike by the Bank of England.
Dollar gains yesterday were also supported by the declining oil prices that hit a 19 month low yesterday. Due to the comfortable weather and the overall declining demand for oil products, crude oil is currently trading around a barrel. Lower energy costs are considered positive for economic growth as they constitute a sizable portion of overall inputs prices. This allows manufacturers to lower prices and consumers to buy more.
Probably the most important data coming from the US this week is the monthly Retail Sales due out later today, forecasted to rise by 0.6%. Given the latest positive macros coming from the US- the improving labor market, the lower energy costs and some encouraging data regarding the housing market- we will be surprised if the Retail Sales data won't surprise for the better as well. In that case, we expect the USD to continue strengthening all across the board.
EUR
The EUR extended its slide a day after European Central Bank President Jean-Claude Trichet failed to signal a February rate rise in his comments made after a policy meeting. The ECB left rates at 3.50% at the meeting on Thursday, as expected, but many market players had hoped for a clear signal for a rate rise next month. However, in a Reuter's poll taken after the meeting, the median forecast showed an 80 percent chance of a 25-basis-point rate hike in March.
The BoE stole the show yesterday, after a surprising rate hike of 0.25 basis points to 5.25%. The GBP quickly boosted 150 pips against the USD to 1.9530 and 40 pips against the EUR to 0.6650.
Yesterday's data, both for the GBP and EUR, was released as expected. There were no major turn-ups following the releases after the GDP data and Industrial Production. Today, we are not expecting any significant news coming from the Euro-Zone.
JPY
The JPY continues being sold-off across the board, and yesterday it breeched the key 120 level against the USD, the first time since December 2005. This occurred despite a possible 0.25% rate hike next Thursday by theBank of Japan. Investors believe that the dollar's rally against the JPY is unlikely to end soon as the yield difference between the two will remain wide.
Meanwhile, BOJ Governor Toshihiko Fukui provided no clues regarding the January rate decision in the speech he gave earlier today when meeting the BOJ's regional branch managers, but rather kept his already familiar tone that the central bank will closely watch economic and price conditions for policy.
The BOJ's report on regional economic conditions, released earlier overnight, the central bank stated that the Japanese economy is expanding moderately and all regions are growing or in a recovery trend. Although the release brought some relief for the JPY and made it gain back a little of its losses against the major, we expect that the JPY will continue its weakening.
Technical News
EUR/USD
The pair is consolidating near 1.2900, at the beginning of the European session. Daily studies are very bearish as hourlies unwind from oversold levels. The pair currently stands at a 50% retracement of the previous uptrend between 1.2485-1.3365. All eyes are on the next major support at the 61.8% Fibonacci and Nov 7 high at 1.2820. The final target for that move is the 200-day MA at 1.2765.
GBP/USD
A strong rally overnight saw the pair stall at 1.9535, but the move was short lived and the price now trades around 1.9470. Dailies are bearish, and hourlies give mixed signals. Traders must look for a wide range of 1.9260-1.9560 with a slight bearish tendency.
USD/JPY
The pair broke through a very important psychological level of 120.00 and does not look stoppable. Dailies are very bullish, as the hourlies approach overbought levels. Next target is another important barrier at 121.00 that if breached, will open some more room to run to the 121.85 area.
USD/CHF
The pair has been testing 1.2500 several times during the overnight session, but could not continue. The fact that the 61.8% Fibonacci resistance at 1.2435 was breached indicates a strong momentum for a rally to the 1.2775 level. Dailies are bullish, and hourlies are neutral.
The Wild Card
GBP/NZD
Forex traders might find an excellent opportunity for a short position on the pair after reaching an important local resistance of 2.8161 which is the 50% Fibonacci of the 2.8950-2.7500 move. It seems like a promising point especially with the ongoing kiwi strengthening.
FOREXYARD
The flow of positive macroeconomic data from the US does not appear to have an end in sight and yesterday it was the Initial Jobless claims that beat expectations at 299K, 25K above analyst consensus. The USD continued strengthening against most counterparts following the release, a trend that started a short while previously as a reaction to the European Central Bank Governor Trichet's speech (more on that in our EUR section). The sole gainer against the dollar yesterday was the GBP, which traded as high as 1.9535 following a surprising rate hike by the Bank of England.
Dollar gains yesterday were also supported by the declining oil prices that hit a 19 month low yesterday. Due to the comfortable weather and the overall declining demand for oil products, crude oil is currently trading around a barrel. Lower energy costs are considered positive for economic growth as they constitute a sizable portion of overall inputs prices. This allows manufacturers to lower prices and consumers to buy more.
Probably the most important data coming from the US this week is the monthly Retail Sales due out later today, forecasted to rise by 0.6%. Given the latest positive macros coming from the US- the improving labor market, the lower energy costs and some encouraging data regarding the housing market- we will be surprised if the Retail Sales data won't surprise for the better as well. In that case, we expect the USD to continue strengthening all across the board.
EUR
The EUR extended its slide a day after European Central Bank President Jean-Claude Trichet failed to signal a February rate rise in his comments made after a policy meeting. The ECB left rates at 3.50% at the meeting on Thursday, as expected, but many market players had hoped for a clear signal for a rate rise next month. However, in a Reuter's poll taken after the meeting, the median forecast showed an 80 percent chance of a 25-basis-point rate hike in March.
The BoE stole the show yesterday, after a surprising rate hike of 0.25 basis points to 5.25%. The GBP quickly boosted 150 pips against the USD to 1.9530 and 40 pips against the EUR to 0.6650.
Yesterday's data, both for the GBP and EUR, was released as expected. There were no major turn-ups following the releases after the GDP data and Industrial Production. Today, we are not expecting any significant news coming from the Euro-Zone.
JPY
The JPY continues being sold-off across the board, and yesterday it breeched the key 120 level against the USD, the first time since December 2005. This occurred despite a possible 0.25% rate hike next Thursday by theBank of Japan. Investors believe that the dollar's rally against the JPY is unlikely to end soon as the yield difference between the two will remain wide.
Meanwhile, BOJ Governor Toshihiko Fukui provided no clues regarding the January rate decision in the speech he gave earlier today when meeting the BOJ's regional branch managers, but rather kept his already familiar tone that the central bank will closely watch economic and price conditions for policy.
The BOJ's report on regional economic conditions, released earlier overnight, the central bank stated that the Japanese economy is expanding moderately and all regions are growing or in a recovery trend. Although the release brought some relief for the JPY and made it gain back a little of its losses against the major, we expect that the JPY will continue its weakening.
Technical News
EUR/USD
The pair is consolidating near 1.2900, at the beginning of the European session. Daily studies are very bearish as hourlies unwind from oversold levels. The pair currently stands at a 50% retracement of the previous uptrend between 1.2485-1.3365. All eyes are on the next major support at the 61.8% Fibonacci and Nov 7 high at 1.2820. The final target for that move is the 200-day MA at 1.2765.
GBP/USD
A strong rally overnight saw the pair stall at 1.9535, but the move was short lived and the price now trades around 1.9470. Dailies are bearish, and hourlies give mixed signals. Traders must look for a wide range of 1.9260-1.9560 with a slight bearish tendency.
USD/JPY
The pair broke through a very important psychological level of 120.00 and does not look stoppable. Dailies are very bullish, as the hourlies approach overbought levels. Next target is another important barrier at 121.00 that if breached, will open some more room to run to the 121.85 area.
USD/CHF
The pair has been testing 1.2500 several times during the overnight session, but could not continue. The fact that the 61.8% Fibonacci resistance at 1.2435 was breached indicates a strong momentum for a rally to the 1.2775 level. Dailies are bullish, and hourlies are neutral.
The Wild Card
GBP/NZD
Forex traders might find an excellent opportunity for a short position on the pair after reaching an important local resistance of 2.8161 which is the 50% Fibonacci of the 2.8950-2.7500 move. It seems like a promising point especially with the ongoing kiwi strengthening.
FOREXYARD
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