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Thursday, January 19th
The EUR/USD pair corrects slightly higher from overnight lows, while keeping steady mode ahead of key events of this Thursday. Yesterday the common currency came under strong selling pressure after hawkish comments of Fed Chairwoman J.Yellen. During her speech the policymaker noted, that the Fed is ready for further rate-hikes, while she expects interest rate to be near 3% by the end of 2019. Moreover, she admitted that US economic growth rate continues to accelerate and inflation is close to its target level, so it is reasonably to gradually cut monetary policy stimulus. However, cautious sentiments among market’s participants are gathering pace, as we are getting closer to the main event of this day – ECB Interest rate decision, followed by press conference, which will be closely eyed for fresh hints on the future ECB policy course.
The USD/CAD was trading in extremely slim range of 15 pips during Asia, consolidating yesterday’s upsurge to its 5-day highs, posted near 1.3270 region. As it was expected, yesterday the BoC left interest rate flat during its meeting, while following BoC Governor S.Poloz’s dovish speech boosted pair’s northern traction. During his speech the head of the Bank noted, that the CB of Canada will keep watching developments surrounding US policy, that have significant impact on Canada’s various economic factors, to determine its further steps. Moreover, yesterday the pair was additionally supported by hawkish comments of Fed Chairwoman J.Yellen, in which she noted that the Fed has been waiting for too long to increase its rate. By the time of writing the pair was trading within its consolidative pattern around the level of 1.3260, awaiting for US data bloc, while weekly oil report from EIA will also be able to bring strong impetus to the pair.
The Aussie loses bullish momentum against its American peer in early Europe, backed by strong Australian data, seen this morning. Yesterday the AUD/USD pair performed sharp downslide, led by global market’s sentiments, however, having been rescued bellow 0.75 handle by positive Australian Employment Change report, that allowed the major to recover some pips. Currently the pair has slowed down its north-directed traction, as shrinking risk appetite ahead of key events scheduled on European trading session, is suppressing higher-yielding assets, such as Australian currency. Next on tap for the pair remains dataflow from the US economy, while market participants will continue to digest the latest J.Yellen’s comments.
Today the USD/JPY pair extends its recovery mode from its seven-week lows posted yesterday at 112.57 handle. Bid tone around the USD currency, based on hawkish comments of J.Yellen, continues lending extra legs to the pair. However, most likely the yen will be able to catch some pips today, as growing nervousness amid investors ahead of ECB Interest Rate Decision is weighing the pair. During the day, the dollar/yen pair will continue to stay under strong influence of global market’s sentiments, while heavy US data calendar will help traders to grab some short-term trading opportunities.
The main events of the day:
ECB Interest Rate Decision – 14.45 (GMT +2)
US Building Permits – 15.30 (GMT +2)
Philadelphia Fed Manufacturing Index – 15.30 (GMT +2)
ECB Press Conference – 15.30 (GMT +2)
US Crude Oil Inventories – 18.00 (GMT +2)
U.S. President D.Trump’s speech – 18.15 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0572 R. 1.0742
USDJPY S. 111.79 R. 116.17
GBPUSD S. 1.2149 R. 1.2467
USDCHF S. 0.9983 R. 1.0119
AUDUSD S. 0.7461 R. 0.7587
NZDUSD S. 0.7059 R. 0.7247
USDCAD S. 1.2959 R. 1.3425
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