Daily economic digest from Forex.ee
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Thursday, February 8th
The EUR/USD pair remains offered this Thursday, as US bulls are still dominating the market, sending the pair to refresh its 2-week lows at 1.2236 mark. The main driving factor across the market today remains a solid pickup in the demand for the US dollar, which continues to exert pressure on the pair this week. However, further sharp moves of the pair look unlikely, as investors are remaining in cautious stance ahead of important events, related to the BoE, and which will be able to bring some correlational impetus to the pair during European trades. Today in the economic data calendar investors won’t find anything important, except several speeches by members of both CBs, which most likely won’t attract much of attention, so US dollar price dynamics will continue to stay the key driving factor for the pair during this trading session.
The GBP/USD pair trades with mildly bullish bias today, despite significant drop in interest around higher-yielding assets, as investors are looking forward to today’s big events. During the European session, the BoE will decide on its interest rate, as well as publish its quarterly inflation report, which expectedly will bring some volatility among all GBP pairs. In Asia, the pair was showing minor activity, which is the normal state for the pair amid cautious pre-rate decision market conditions. Today investors expect that the Bank will keep its rate unchanged, as only three months have passed since the last rate hike, so expected that the regulator will continue to maintain its wait-and-see mode, while any Bank’s economic projections, especially indicated in Inflation Report, will have significant impact on the pound. Besides the key events, related to the BoE, nothing important is scheduled in the economic calendar, so all investors’ attention will remain focused to the possible changes in the BOE’s monetary policy program.
The NZD/USD pair remains under heavy pressure of multiple factors this Thursday, which are significantly weighing the Kiwi, and forced the pair to reach its monthly lows, located below the level of 0.72. The main bearish factor for the pair remains the outcome of the RBNZ meeting, which was perceived by the market as a dovish. As it was widely expected, the Bank left its Official Cash Rate unchanged at 1.75 %, however, downgrading its outlooks for inflation and GDP. Regarding further policy course, the CB stated that it would continue to adhere accommodative monetary policy for a considerable period, as numerous uncertainties still persist and policy needs to be adjusted accordingly. Adding to this, dovish comments of RBNZ Assistant Governor J.McDermott, who said that further drop in inflation could trigger a rate cut, exerted extra pressure on NZD/USD. Another bearish factor that navigates the pair today is broadly increased demand for the US dollar. On the data front, today the US economic calendar won’t bring us anything noteworthy, leaving the pair at the mercy of greenback price dynamics, while market participants will continue to digest recent event.
The USD/JPY pair keeps its bid tone in the second half of this week, despite better demand for safety, seen during Asia. First, the yen received notable bearish impetus following comments of BoJ Governor Haruhiko Kuroda, who was speaking in the Japanese parliament. The head of the CB reaffirmed that the central bank will continue powerful quantitative easing to achieve price stability. Moreover, increased buying interest around the US dollar, witnessed during this week, also remains supportive for the pair today. Looking ahead, in absence of any relevant data releases from the US side, the pair will continue to follow the US dollar price dynamics, which remains the key driving factor across the market this Thursday.
Major events of the day:
BoE Inflation Report – 14.00 (GMT +2)
BoE Interest Rate Decision – 14.00 (GMT +2)
BoE Governor M.Carney’s Speech – 14.30 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.2145 R. 1.2465
USDJPY S. 108.52 R. 110.12
GBPUSD S. 1.3760 R. 1.4054
USDCHF S. 0.9293 R. 0.9523
AUDUSD S. 0.7756 R. 0.7940
NZDUSD S. 0.7127 R. 0.7399
USDCAD S. 1.2457 R. 1.2631
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