Forex Market Update

[marco henriques]

Weekly Forex Update

In the first week of 2014, the US Dollar swung between gains and losses and finally settled mixed against its key peers. However, gains in the greenback came after the key officials from the US Federal Reserve (Fed) painted a bright picture of the US economy, signaling a further rollback of the bond purchases.

The outgoing Fed Chairman, Ben Bernanke, opined that the economical headwinds for the US economy have begun to fade and expected the nation to grow further in the coming months. He also backed the necessity of the central bank’s ultra loose monetary policy to support the US economy. Meanwhile, Fed’s Richmond President, Jeffrey Lacker, cautioned that the central bank might consider bringing in further reduction in its bond purchases in its coming policy meetings.

Economic data released in the US during the last week were mixed. Pending home sales rebounded at a slower pace in November. A separate report released by the Institute of Supply Management revealed that manufacturing purchasing managers’ index (PMI) in December rose at a slower pace. However, consumer confidence in the US improved in December, while the weekly initial jobless benefits dropped unexpectedly.

In the week ahead, the US Federal Reserve is to publish the minutes of its December meeting on Wednesday, while the US jobs report for December is scheduled to be released on Friday. Meanwhile, interest rate decisions by the European Central Bank and the Bank of England will also be in focus.

The Euro ended the week in the red against the USD. Meanwhile, the manufacturing activities in the major members of the Euro-bloc picked-up in December. In a key development, Latvia became the eighteenth member of the Euro-zone. The Euro traders are expected to have a busy week with economical and fundamental developments scheduled throughout the week that would keep them busy adjusting their bets.

The winning streak of the Sterling took a halt in the past week, after manufacturing activity in the UK unexpectedly cooled for December, highlighting that obstacles to economic recovery continue to persist. Moreover, the UK’s Prime Minister, David Cameron, in his New Year’s message cautioned that the UK’s economical recovery still remains fragile. He also pledged to chalk out a five-part plan to foster the economical activities in the nation. Meanwhile, he dismissed the fears of a housing bubble in the UK.

The Bank of Japan’s (BoJ) Governor, Haruhiko Kuroda, stated to keep size of the monetary stimulus unchanged until the nation achieves its inflation target. The JPY traders are expected to have another light week, amid a thin economic calendar.

The first week of the New Year came as a blessing for the Loonie, amid escalating expectations that the recent economical improvements in its southern neighbor might result in healthy trading activity between the two North American nations.

The Aussie pared its first weekly gain in recent weeks, after a report revealed that the manufacturing and services activity in its major trading partner, China, slowed in the past month, dampening the trading prospects between the two nations.

EUR USD

Last week, the EUR traded 1.16% lower against the USD and closed at 1.3603. During the week, Markit economics highlighted that the manufacturing activities in most of the major nations in the Euro-zone showed healthy signs of improvement in December, suggesting the economic conditions in the bloc have started to pick up. Meanwhile, the bloc got its eighteenth member Latvia in the first week of the New Year.

In other economic news, M3 Money Supply rose 1.5% (YoY) in November, whereas the private loans dropped in the similar period. During the week, the pair traded at a high of 1.3820 and a low of 1.3592. The pair is expected to find its first support at 1.3523, with the next support expected at 1.3444. The first resistance is at 1.3751, and the next at 1.3900.

The ECB’s monetary policy meeting would be the highly tracked event this week, which would provide clues as to how the central bank intends to combat the economical slowdown in the Euro region. Also, the Euro-zone’s growth report and consumer price index data would be on the radar of market participants.         

GBP USD

In the last week, GBP traded 0.35% lower against the USD and closed at 1.6427, as the investors in the UK Pound booked profits following the recent rally in the Sterling and as manufacturing PMI report for December showed a decline in the manufacturing activity in the UK. Meanwhile, construction PMI dropped at a slower pace in December, while mortgage approvals climbed at a multi month high in November. The British Prime Minister David Cameroon, chalked out a five part plan to foster the economic activities in the nation. However, he also cautioned that the recovery in the nation still remains fragile. The pair traded at a high of 1.6604 and a low of 1.6395 in the previous week. GBPUSD is expected to find its first support at 1.6347, with the next at 1.6266. Resistance exists first at 1.6556, and then at 1.6684.

The Bank of England’s interest rate decision would take the driver’s seat this week, followed by the UK’s growth forecast by the National Institute of Economic and Social Research. Also, a string of domestic macroeconomic updates would keep investors busy in adjusting their trades in the pair.    

USD JPY

The USD traded 0.64% lower against the JPY over the past week, closing at 104.47. The BoJ’s Governor, Haruhiko Kuroda, voiced that the central might not cut the size of its monetary stimulus until the nation does not reach its inflation target. The pair experienced a fairly thin trading week, as markets in Japan remained shut for most of the days in the past week, leaving investors wait for the next batch macroeconomic data from the nation. The pair traded at a high of 105.46 and a low of 104.07. The pair is expected to find its first support at 103.87, with the next support expected at 103.28. The first resistance is at 105.26, and the next at 106.06.

The BoJ’s monthly economic survey is the key update in Japan during the week. Meanwhile, investors are also expected to keep a close tab on the release of the nation’s Eco watcher’s indices during the week. Traders would also keep a tab on the US Federal Reserve’s minutes of its December meeting set to release on Wednesday.

USD CHF

USD traded 1.56% higher against the CHF and closed at 0.9043 in the last week, as remarks from the US Fed Chairman, Ben Bernanke, that the US economy is expected to grow in the coming months, supported the greenback. On the data front, the Swiss leading indicator rose to a reading of 1.95 in December. Meanwhile, manufacturing activity in the nation rose at a slower pace in the similar period. During the period, the pair traded at a high of 0.9031 and a low of 0.8860. The first support is at 0.8894, and the next at 0.8792. Resistance exists first at 0.9065, and then at 0.9134.

Going ahead, the Swiss inflation and unemployment report would act as a catalyst in determining the weekly trend in the pair. The Swiss National Bank is to publish data on its foreign currency reserves on Tuesday, which would be closely scrutinized for indications of the size of the bank’s operations in currency markets.

USD CAD

Last week, the USD traded 0.80% lower against the CAD and closed at 1.0618. The Loonie found support amid optimism that the recent economical developments in the US might improve the trading activity between the two nations. However, a holiday shortened week kept the trading volumes limited, with investors taking clues from the news originating from the US. USDCAD traded at a high of 1.0729 and a low of 1.0587 in the previous week. The first support is at 1.0560, with the next at 1.0503. The first resistance is at 1.0702, while the next is at 1.0787.

Going forward, the Loonie traders would track the Canadian jobs, housing and manufacturing report to evaluate the health of the Canadian economy.

AUD USD

AUD traded 1.22% higher against the USD last week, and closed at 0.8976, reversing its directions from the previous weekly losses. However, a slowdown in the Chinese manufacturing and services activity kept the gains under constant check. On the data front, private sector credit in Australia rose 0.3% (MoM) in November. Meanwhile, the performance of manufacturing index released by the Australian Industry Group stood at a reading of 47.6 in December. During the week, the pair traded at a high of 0.9007 and a low of 0.8832. The first support is at 0.8870, and the next at 0.8763. The first resistance is at 0.9045, and the next at 0.9113.

The Australian trade balance, retail sales and building permits are the important macroeconomic indicators ahead in the week. Also the Aussie investors would keep a close tab on a string of macroeconomic releases from China.

Gold

In the prior week, Gold traded 1.90% higher against the USD and closed at USD1237.38, reversing its directions from the previous decline, as bargain hunters grabbed the cheap valuations in the yellow metal. The gold prices found support, amid speculations that physical buying in China during its festive week would help the yellow metal revive some of its recent losses. Meanwhile, the World Gold Council projected that the Chinese gold consumption might have exceeded 1,000 tonnes in 2013. However, the gains in the yellow metal were limited, as yet another batch of encouraging US data resulted in a rise in the risk appetite. The yellow metal traded at a high of 1241.30 and a low of 1182.27 in the previous week. Gold is expected to find support at 1199.33 and the next at 1161.29. The first resistance is at 1258.36, while the next is at 1279.35.

Moving forward, the gold traders would focus closely on the release of the minutes of the Fed's December meeting. The Fed stated in December that it would trim its monthly asset purchases by $10 billion to a total of $75 billion per month from January. A focal point is whether there is going to be a reduction of $10 billion at every meeting, or whether they will wait and see for a while.

Crude Oil

The crude oil kicked off the New Year on a negative note, dropping 5.96% against the USD, to settle at $94.21, as reports of the resumption of the Libyan crude oil stockpiles eased the supply concerns. A strong dollar also pressurized crude oil prices. Moreover, dismal macroeconomic data points from China also dampened demand prospects for the crude oil. During the week, the American Petroleum Institute reported that the US crude oil stock piles fell 5.67 million barrels for the week ended December 27. Meanwhile, the Energy Information Administration reported a drop of 7 million barrels for the similar period. Oil traded at a high of 100.42 and a low of 93.86 in the previous week. Oil has its first major support at 91.91, while the next support exists at 89.6. The first resistance is at 98.47, and the next at 102.72.

The decline in crude prices is expected to be further tone-down in the few days ahead after a wobbly week, as investors awaits the minutes of the US Federal Reserve's previous board meeting, for further insight into the reasons behind the decision and offer clues about how quickly the Fed will wind down the stimulus. The oil prices would also take upward or downward course depending upon the developments in the Middle East.

Happy pips.

[marco henriques]

Forex Market Update 06Jan13

This morning the greenback is trading higher against its major counterparts, amid growing optimism among investors regarding the US economic recovery in 2014 and amid the possibility of further tapering of asset purchases by the Fed in the coming months. The USD also rose, after the remarks from the US Federal Reserve’s (Fed) Chief that obstacles to the US economic recovery are slowly fading.

Additionally, the Fed’s regional Presidents from Richmond and Philadelphia, indicated that the central bank might bring in greater reductions in its asset purchases in its upcoming meetings, in light of the recent economic developments. Meanwhile, the Philadelphia Fed President, Charles Plosser, warned that the central bank may be forced to aggressively hike interest rates from their current levels. Investors have an action packed week with their plates filled with a lot of macroeconomic and fundamental fodder.

The Euro is trading in the green against the greenback, following the release of positive services PMI data for most of the Euro-zone economies. Additionally, an upbeat Euro-zone Sentix investor confidence report further added to signs of a steady economic recovery in the currency bloc.

The Sterling failed to held on to its previous gains, after the UK’s Chancellor’s Exchequer, George Osborne, warned that another spending cut of almost £25 billion is required to make up for the losses to the nation’s treasury due to the reduction in the taxes. The GBP also fell, after the final service PMI for December came in considerably short of the flash data estimate.

In the Asian trading hours, risk sentiment came under pressure, after growth in China's services sector slowed sharply in December, adding to signs of slowing momentum in the world's second-largest economy.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3617 against the USD, 0.10% higher from the New York close, following the release of largely upbeat European services PMI data. Additionally, the Euro-zone Sentix investor confidence index improved sharply in January to the highest since April 2011, strengthening the Euro-zone economy outlook by showing investors in the bloc are most bullish in almost two years. Investors would now keep a close tab on the release of Germany’s inflation report due later today. During the session, the pair traded at a high of 1.3619 and a low of 1.3571. On Friday, the EUR traded 0.29% lower against the USD in the New York session, and closed at 1.3603.

The pair is expected to find its first support at 1.3572 and first resistance at 1.3661.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6378 against the USD, 0.30% lower from the New York close, after the UK’s Chancellor’s Exchequer, George Osborne, indicated that a spending cut is required to offset the consequences tax reductions. The Pound also came under pressure, after growth in Britain's services sector slowed unexpectedly in December, raising doubts about whether the pace of growth can be sustained in 2014. During the session, the pair traded at a high of 1.6418 and a low of 1.6337. On Friday, the British Pound traded tad higher versus the Dollar in the New York session, and closed at 1.6427.

The pair is expected to find its first support at 1.6318 and first resistance at 1.6457.

USD JPY

The USD is trading at 104.53 against the JPY at 10:40 GMT this morning, 0.06% higher from the New York close. The Yen traders are expected to track news emanating from Europe and the West, amid a light economic calendar during the week. During the session, the pair traded at a high of 104.96 and a low of 104.15. In the New York session on Friday, the USD traded slightly lower against the JPY, and closed at 104.47.

The pair is expected to find its first support at 104.13 and first resistance at 104.95.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9039 against the Swiss Franc, marginally lower from the New York close, ahead of the Swiss unemployment and inflation data to be released later during the week. During the session, the pair traded at a high of 0.9068 and a low of 0.9038. In the New York session on Friday, the USD traded 0.27% higher against the CHF, and closed at 0.9043.

The pair is expected to find its first support at 0.9005 and first resistance at 0.9071.

USD CAD

At 10:40 GMT, the USD is trading at 1.0622 against the CAD, slightly higher from the New York close, ahead of the Canadian industrial product price data to be released later today. During the session, the pair traded at a high of 1.0642 and a low of 1.0608. On Friday, the USD traded modestly lower against the CAD in the New York session, and closed at 1.0618.

The pair is expected to find its first support at 1.0599 and first resistance at 1.0646.

AUD USD

The AUD is trading at 0.8964 against the USD, at 10:40 GMT this morning, 0.13% lower from the New York close, as yet another dismal macroeconomic report from China, indicated that the world's second-biggest economy is starting the new year sluggishly. The HSBC China services purchasing managers' index fell to 50.9 in December from 52.5 in November. During the session, the pair traded at a high of 0.8984 and a low of 0.8934. AUD traded 0.14% lower against the USD in the New York session, and closed at 0.8976.

The pair is expected to find its first support at 0.8930 and first resistance at 0.9003.

Gold

At 10:40 GMT, Gold is trading at $1238.04 per ounce, tad lower from the New York close, as weak services activity report from the yellow metal’s largest consumer, China, dampened the demand prospects for the gold. This morning, Gold traded at a high of $1246.46 and a low of $1233.15 per ounce. In the New York session on Friday, the yellow metal traded 0.58% higher, and closed at $1238.05.

Gold has its first support at $1227.94 and first resistance at $1247.30..

Silver

Silver is trading at $20.05 per ounce, 0.59% lower from the New York close, at 10:40 GMT this morning, after growth in China's services sector slowed sharply last month, raising concerns about the pace of recovery in the world's

second-largest economy. This morning, Silver traded at a high of $20.35 and a low of $19.97. Silver traded 0.06% lower against the USD in the New York session, and closed at $20.17.

Silver has its first support at $19.89 and first resistance at $20.28.

Crude Oil

At 10:40 GMT, Oil is trading at $94.48 per barrel, 0.20% higher from the New York close, as reports of a blast in the North Iraqi pipeline renewed the supply concerns of the crude oil. However, the gains were caped, amid weekend news that Libya has resumed its crude oil production at one of its oil field and might increase its output in the coming days. This morning, Oil traded at a high of $94.54 and a low of $93.91. On Friday, Oil traded 1.33% lower in the New York session, and closed at $94.25. The Energy Information Administration reported that the US crude oil stock pile dropped 7.0 million barrels for the week ended December 27.

It has its first support at $93.71 and first resistance at $95.41.

Economic Snapshot

UK services PMI declined unexpectedly in December

The services purchasing managers’ index (PMI) in UK fell to a reading of 58.8 in December, from a reading of 60.0 in the previous month. Market had expected the index to rise to a reading of 60.3 in December.

UK’s official reserves fell at slower pace in December

The official reserves in the UK dropped by $536.0 million in December, compared to a fall of $868.0 million reported in the previous month.

Euro-zone services PMI declined in line with flash estimate in December

The services PMI in the Euro-zone dropped to a level of 51.0 in December, in line with preliminary estimate of a level of 51.0 and compared to a level of 51.2 recorded in the previous month. The composite PMI rose to a level of 52.1 in December, from a level of 51.7 recorded in the previous month and in line with preliminary estimate of a level of 52.1.

Euro-zone Sentix investor confidence climbed more than expected in January

Sentix investor confidence in the Euro-zone rose to a level of 11.9 in January, compared to a reading of 8.0 reported in the previous month. Markets were expecting the index to increase to a reading of 9.3 in January.

German services PMI fell more than the preliminary estimate in December

German final services PMI declined to a level of 53.5 in December, lower than the preliminary estimate of a level of 54.0 and compared to a level of 55.7 recorded in November.

French final services PMI contracted less than preliminary estimate in December

France’s services PMI dropped to a level of 47.8 in December, from a level of 48.0 reported in November. France had reported a preliminary estimate of a level of 47.4 in December.

Italian services PMI advanced in December

The services PMI in Italy rose to a reading of 47.9 in December, compared to a reading of 47.2 reported in the previous month.

Spain services PMI expanded unexpectedly in December

Spain’s services PMI climbed to a level of 54.2 in December, compared to a level of 51.5 registered in the previous month.

China services sector activity dropped in December

China’s services PMI dropped to a level of 50.9 in December, from a level of 52.5 reported in November.

Happy pips to all.

[marco henriques]

Forex Market Update 07Jan13

This morning the greenback stood firm against its key peers. However, it registered losses in the previous session as the confirmation of Janet Yellen, having a dovish outlook, as the next Chair Person of the US Federal Reserve (Fed) pressurized the dollar. Also, the release of a mixed bag of macroeconomic data from the US left the greenback trade in the red.

A report published by the Institute of Supply Management revealed that the services sector in the US experienced a slowdown in December. Meanwhile, factory orders in the US rebounded at a faster pace in November. Today’s market action is expected to move around speeches from a couple of Fed’s policy makers, who may help investors to gauge what they should expect from the central bank in its future meetings.

The Euro is trading higher this morning, after German unemployment unexpectedly fell in December, bolstering hopes that domestic consumption could lift growth in Europe's biggest economy. Meanwhile, nation’s retail sales saw a spectacular recovery in November. However, data released this morning showed that consumer prices across the Euro-zone dipped further below target in December, a development that may prompt the European Central Bank to consider easing monetary policy in coming months.

In UK, the British Chamber of Commerce in its quarterly survey noted that the nation’s economy is expected to improve further in the current year.

Yesterday, the Canadian Finance Minister indicated that the nation’s budget surplus is expected to widen in coming years and that central bank expects the Loonie to weaken in the future.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3641 against the USD, 0.09% higher from the New York close, after data released earlier today showed that the number of people out of work in Germany fell by 15,000 to 2.965 million, the biggest decrease in two years, while the unemployment rate remained steady in December, highlighting that the nation’s labor market remain in fundamentally good shape. Moreover, nation’s retail sales rose more than expected in November, pointing to a strong finish of 2013. During the session, the pair traded at a high of 1.3643 and a low of 1.3611. Yesterday, the EUR traded 0.20% higher against the USD in the New York session, and closed at 1.3629.

The pair is expected to find its first support at 1.3605 and first resistance at 1.3665.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6404 against the USD, tad higher from the New York close.  In absence of any macro-economic triggers, traders keenly awaits the Bank of England’s monetary policy meeting later this week, as policymakers gather for their first meeting of 2014, amid mounting expectations that Governor, Mark Carney will change the threshold for considering interest rate hike within months. During the session, the pair traded at a high of 1.6420 and a low of 1.6377. Yesterday, the British Pound traded 0.14% higher versus the Dollar in the New York session, and closed at 1.6402.

The pair is expected to find its first support at 1.6373 and first resistance at 1.6435.

USD JPY

The USD is trading at 104.44 against the JPY at 10:40 GMT this morning, 0.21% higher from the New York close. During the session, the pair traded at a high of 104.62 and a low of 104.17. In the New York session yesterday, the USD traded 0.35% lower against the JPY, and closed at 104.22.

The pair is expected to find its first support at 103.95 and first resistance at 104.88.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9066 against the Swiss Franc, 0.31% higher from the New York close. On the economic front, the foreign currency reserves in Switzerland narrowed less than market expectations in December. During the session, the pair traded at a high of 0.9085 and a low of 0.9036. In the New York session yesterday, the USD traded 0.18% lower against the CHF, and closed at 0.9038.

The pair is expected to find its first support at 0.9029 and first resistance at 0.9094.

USD CAD

At 10:40 GMT, the USD is trading at 1.0692 against the CAD, 0.34% higher from the New York close, ahead of the Canadian trade and manufacturing data to be released later today. During the session, the pair traded at a high of 1.0693 and a low of 1.0651. Yesterday, the USD traded 0.05% higher against the CAD in the New York session, and closed at 1.0656. The Canadian Finance Minister, Jim Flaherty, indicated that Canada might face external pressure to hike its interest rates in the current year. Meanwhile, he also stated that the Loonie is expected to weaken in the future and that nation might have bigger budget surplus in 2015-2016.

The pair is expected to find its first support at 1.0644 and first resistance at 1.0716.

AUD USD

The AUD is trading at 0.892 against the USD, at 10:40 GMT this morning, 0.52% lower from the New York close, after the Australian trade balance continued to report a deficit in November. During the session, the pair traded at a high of 0.8971 and a low of 0.8911. AUD traded 0.20% higher against the USD in the New York session, and closed at 0.8967.

The pair is expected to find its first support at 0.8896 and first resistance at 0.8959.

Gold

At 10:40 GMT, Gold is trading at $1238.7 per ounce, 0.12% higher from the New York close, as escalating expectations that the upcoming festive season in one of the largest consumer of yellow metal, China, might provide some relief to the recent downfall in the gold prices. This morning, Gold traded at a high of $1245.49 and a low of $1235.00 per ounce. In the New York session yesterday, the yellow metal traded tad higher, and closed at $1237.27.

Gold has its first support at $1218.32 and first resistance at $1253.80.

Silver

Silver is trading at $20.09 per ounce, 0.34% lower from the New York close, at 10:40 GMT this morning. This morning, Silver traded at a high of $20.31 and a low of $20.03. Silver traded 0.66% higher against the USD in the New York session, and closed at $20.16.

Silver has its first support at $19.93 and first resistance at $20.30.

Crude Oil

At 10:40 GMT, Oil is trading at $93.79 per barrel, 0.10% higher from the New York close, ahead of the weekly inventory update from the American Petroleum Institute scheduled later today. However, reports of the reopening of the largest oil field in Libya kept the gains under check. This morning, Oil traded at a high of $93.87 and a low of $93.43. Yesterday, Oil traded 0.68% lower in the New York session, and closed at $93.67, as an unexpected drop in the US non manufacturing gauge dampened the demand prospects from the largest consumer of the crude oil.

It has its first support at $93.13 and first resistance at $94.52.

Economic Snapshot

Euro-zone consumer price inflation advanced less than expected in December

The preliminary consumer price index (CPI) in the Euro-zone rose 0.8% in December, below the market estimates for a rise of 0.9% and compared to a 0.9% rise recorded in November. Additionally, on an annual basis, the core CPI in the Euro-zone rose to 0.7% in December, after recording a gain of 0.9% in November.

Euro-zone producer prices fell less than expected in December

On an annual basis, the producer price index (PPI) in the Euro-zone dropped 1.2% in December, slower as compared to an upwardly revised fall of 1.3% recorded in the preceding month. Market had expected the PPI to fall 1.3% in December. On a monthly basis, the PPI in the Euro-zone fell 0.1% in December, after recording a drop of 0.5% in the previous month.

German unemployment rate remained steady in December

On a seasonally adjusted basis, unemployment rate in Germany remained unchanged at 6.9% in December, compared to the previous month. Meanwhile, the number of people unemployed in Germany fell by 15.0 K in December, compared to revised 9.0 K rise reported in the previous month.

German retail sales rebounded more than expected in November

On a monthly basis, retail sales in Germany increased 1.5% in November, compared to a 0.8% fall recorded in the previous month. Markets had expected retail sales to rise 0.5% in November. On an annual basis, retail sales in Germany rose 1.6% in November, compared to a revised 0.1% decrease recorded in the previous month.

France consumer confidence index climbed more than forecasts in December

The consumer confidence index in France rose to a level of 85.0 in December, compared to a reading of 84.0 recorded in the preceding month. Markets had expected the index to remain steady at a level of 84.0 in December.

Swiss foreign currency reserves fall less than forecasts in December

Foreign currency reserves in Switzerland declined to CHF 435.2 billion in December, compared to revised CHF 435.9 billion reserves recorded in the previous month. Markets were expecting foreign currency reserves to fall to CHF 435.0 billion in December.

Australia trade deficit narrowed more than expected in November

Australia’s seasonally adjusted trade deficit narrowed to A$ 118.0 million in November, compared to an upwardly revised deficit of A$ 358.0 million recorded in the previous month. Market had expected Australia’s trade deficit to narrow to A$ 250.0 million in November.

Happy pips.

[marco henriques]

Forex Market Update 08Jan13

The US dollar continued its winning streak against its key peers this morning, as positive domestic data and mixed clues from the US Federal Reserve’s (Fed) regional Presidents came as a blessing for the greenback.

The San Francisco Fed President, John Williams, yesterday indicated that the central bank is expected to completely cease its ultra loose monetary policy by the end of the current year. Meanwhile, Fed’s regional President from Boston opined that the central bank should not hurriedly roll back its monetary policy.

Separately, data released yesterday in the US indicated that the country's trade deficit narrowed unexpectedly, fuelling hopes for more sustained recovery down the road. Moving forward, the release of the minutes of the Fed’s December meeting is likely to keep investors on their toes in today’s market action, as it would help in evaluating how quickly the central bank intends to bring in further changes in its bond purchases. Also, the ADP jobs report would attract significant market attention.

In a noteworthy development, the International Monetary Fund’s Managing Director, Christine Lagarde voiced to upgrade the global growth outlook in the coming weeks.

The Euro is trading in the red against the greenback, as unemployment in the Euro-zone remained stuck at its record high of 12.1% in November with 19.2 million of people without work. However, the losses were kept in check as the German factory orders and Euro-zone’s retail sales rebounded in November.

Meanwhile, the UK Pound ticked higher against the USD in today’s session despite the release of downbeat domestic housing market report earlier today that showed an unexpected fall in house prices in the UK for December.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3587 against the USD, 0.22% lower from the New York close, despite a rebound in Euro-zone’s retail sales and German factory orders data in November. In other economic news, German trade surplus widened less than market expectations in November. Meanwhile, unemployment in the Euro-zone remain unchanged in the similar period. The Euro also came under pressure as investors remained cautious ahead of the FOMC minutes for further details on the committee's December decision to trim the $85-billion bond-buying program by $10 billion. During the session, the pair traded at a high of 1.3636 and a low of 1.3584. Yesterday, the EUR traded 0.19% lower against the USD in the New York session, and closed at 1.3617.

The pair is expected to find its first support at 1.3562 and first resistance at 1.3635.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6420 against the USD, 0.10% higher from the New York close. However, the gains were limited as Halifax house prices in the UK dropped unexpectedly in December, while the British Retail Consortium’s shop price index dropped further in December. During the session, the pair traded at a high of 1.6433 and a low of 1.6376. Yesterday, the British Pound traded 0.06% lower versus the Dollar in the New York session, and closed at 1.6403.

The pair is expected to find its first support at 1.6383 and first resistance at 1.6449.

USD JPY

The USD is trading at 104.79 against the JPY at 10:40 GMT this morning, 0.18% higher from the New York close. The JPY continued to lose ground amid a light economic calendar in Japan. The Yen traders would closely focus on the release of the Fed’s minutes later during the day to evaluate the trend in the pair. During the session, the pair traded at a high of 105.13 and a low of 104.59. In the New York session yesterday, the USD traded 0.13% higher against the JPY, and closed at 104.60.

The pair is expected to find its first support at 104.37 and first resistance at 105.17.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9103 against the Swiss Franc, 0.14% higher from the New York close. The Swiss Franc traders are expected to track global macroeconomic data points for placing their trades in the pair. During the session, the pair traded at a high of 0.9111 and a low of 0.9076. In the New York session yesterday, the USD traded 0.24% higher against the CHF, and closed at 0.9090.

The pair is expected to find its first support at 0.9069 and first resistance at 0.9124.

USD CAD

At 10:40 GMT, the USD is trading at 1.0810 against the CAD, 0.42% higher from the New York close. During the session, the pair traded at a high of 1.0830 and a low of 1.0757. Yesterday, the USD traded 0.67% higher against the CAD in the New York session, and closed at 1.0765. The Loonie lost ground after the Canadian purchasing activity unexpectedly went in to the contraction territory in December. Moreover, an unexpected surge in the nation’s trade deficit in November also pressurized the Loonie.

The pair is expected to find its first support at 1.0718 and first resistance at 1.0866.

AUD USD

The AUD is trading at 0.8924 against the USD, at 10:40 GMT this morning, tad lower from the New York close. On the economic data front, Australia’s foreign reserves shrank in December. During the session, the pair traded at a high of 0.8939 and a low of 0.8901. AUD traded marginally lower against the USD in the New York session, and closed at 0.8925.

The pair is expected to find its first support at 0.8897 and first resistance at 0.8947.

Gold

At 10:40 GMT, Gold is trading at $1227.11 per ounce, 0.38% lower from the New York close, as hawkish outlook from the Fed’s regional Presidents continued to support the greenback. Traders now awaits preliminary ADP jobs data later today ahead of Friday's numbers, and the release of the minutes of the Fed's latest policy meeting at 1900 GMT, which will shed light on the Fed's decision to taper at the December meeting. This morning, Gold traded at a high of $1232.64 and a low of $1221.44 per ounce. In the New York session yesterday, the yellow metal traded 0.43% lower, and closed at $1231.73.

Gold has its first support at $1218.77 and first resistance at $1238.11.

Silver

Silver is trading at $19.57 per ounce, 1.51% lower from the New York close, at 10:40 GMT this morning, amid broad based strength of the US dollar. This morning, Silver traded at a high of $19.88 and a low of $19.46. Silver traded 0.72% lower against the USD in the New York session, and closed at $19.87.

Silver has its first support at $19.30 and first resistance at $19.98.

Crude Oil

At 10:40 GMT, Oil is trading at $93.76 per barrel, 0.20% lower from the New York close, as severe climatic conditions in the US and Canada forced many oil fields to remain shut. Moreover, civil unrest in Sudan also supported crude oil prices. Investors also await the weekly inventory update from the West’s prime oil watchdog, the Energy Institute Administration, later today. This morning, Oil traded at a high of $94.18 and a low of $93.67. Yesterday, Oil traded 0.18% lower in the New York session, and closed at $93.93. The American Petroleum Institute reported a drop of 7.3 million barrels in the US crude oil stock piles for the week ended 3 January.

It has its first support at $93.33 and first resistance at $94.20.

Economic Snapshot

UK Halifax house price index fell unexpectedly in December

Halifax house price index in the UK fell 0.6% on a monthly basis in December, following a revised rise of 0.9% recorded in the preceding month. Markets were expecting Halifax house prices to rise 0.9% in December. On an annual basis, Halifax house prices in the UK rose 7.5% for the period of October to December, compared to a 7.7% rise for the previous three months.

BRC shop price index in the UK dropped in December

On an annual basis, the BRC shop price index in the UK dropped 0.8% in December, compared to a 0.3% decrease in the preceding month.

Euro-zone unemployment rate remained unchanged in November

The unemployment rate in the Euro-zone remained unchanged at 12.1% in November, in line with market expectations.

Euro-zone retail sales advanced more than forecasted in November

On a monthly basis, retail sales in the Euro-zone rose 1.4% in November, after recording a downwardly revised drop of 0.4% in the previous month. Market had expected retail sales to rise 0.1% in November. On an annual basis, retail sales in the Euro-zone climbed 1.6% in November, compared to a downwardly revised decrease of 0.3% reported in October.

German factory orders rebounded more than 3expected in November

On a monthly basis, factory orders in Germany rose 2.1% in November, compared to an upwardly revised fall of 2.1% recorded in the previous month. Markets had expected German factory orders to rise 1.5% in November. On a non seasonally adjusted annual basis, factory orders in Germany climbed 6.8% in November, after recording an upwardly revised 2.0% increase in the previous month.

German current account surplus widened more than expected in November

Germany posted a non-seasonally adjusted current account surplus of €21.6 billion in November, compared to a revised surplus of €18.8 billion recorded in the previous month. Markets had expected Germany’s current account surplus to widen to €19.3 billion in November.

German trade surplus widened less than forecasts in November

On a calendar and seasonally adjusted basis, trade surplus of Germany increased to €17.8 billion in November, from a revised surplus of €16.7 billion recorded in the previous month. Markets had expected Germany’s trade surplus to increase to €18.0 billion in November.

Italy unemployment rate rose more than expected in November

The preliminary unemployment rate in Italy rose to 12.7% in November, compared to a rate of 12.5% reported in October. Markets were expecting Italy’s unemployment rate to rise to 12.6% in November.

Australia foreign exchange reserves decreased in December

Foreign exchange reserves in Australia dropped to A$ 59.5 billion in December, compared to reserves of A$ 59.9 billion recorded in the previous month.

Happy pips.

[marco henriques]

Forex Market Update 09Jan13

This morning the US Dollar continued to rise against its major counterparts, supported by the strong ADP employment data for December released yesterday in the US. Against this backdrop, traders would keenly follow today’s initial jobless claims and tomorrow’s unemployment data for further insights.

However, the greenback’s upward momentum was kept in check after the minutes of FOMC meeting indicated that policymakers remained worried about the low inflation in the nation, despite a general consensus over the recovery in labor market. Additionally, policymakers saw declining benefits of its bond buying programme that led to the central bank to taper its 

asset-purchase program. Furthermore, the FOMC voting members decided that future reductions “would be undertaken in measured steps.”

European investors are expected to have a busy day today as central banks from the European Union and from the UK are scheduled to meet for the first time in 2014 where they would adjust their respective monetary tools to foster economic activities in their regions.

Meanwhile, improvements in the Euro-zone’s consumer confidence, business climate and services sentiment data kept the Euro trade in the green against the USD and the UK Pound.

Elsewhere in Asia, the Chinese inflation eased in December, providing further room for the policy makers to go ahead with the reforms to foster economic activities in the world’s second largest economy. The Aussie dipped further following the release of dismal local housing report.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3608 against the USD, 0.23% higher from the New York close, as investors awaited for policy decisions by the European Central Bank, paring some its yesterday’s losses when the greenback broadly strengthened amid speculations over more tapering by the Federal Reserve. In economic news, consumer confidence, business climate and services sentiment showed signs of improvements in December, whereas, industrial production in Germany rebounded in November. During the session, the pair traded at a high of 1.3623 and a low of 1.3566. Yesterday, the EUR traded 0.09% lower against the USD in the New York session, and closed at 1.3577.

The pair is expected to find its first support at 1.3566 and first resistance at 1.3636.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6455 against the USD, marginally higher from the New York close, ahead of the Bank of England’s monetary policy meeting wherein the key officials from the central bank would meet and discuss as to how they can sustain the economic recovery in the UK. On the data front, trade deficit in the UK shrank less than market expectations in November. During the session, the pair traded at a high of 1.6481 and a low of 1.6441. Yesterday, the British Pound traded 0.13% higher versus the Dollar in the New York session, and closed at 1.6449.

The pair is expected to find its first support at 1.6409 and first resistance at 1.6491.

USD JPY

The USD is trading at 104.99 against the JPY at 10:40 GMT this morning, 0.13% higher from the New York close, ahead of the Bank of Japan’s monthly economic survey to be released later tomorrow. During the session, the pair traded at a high of 105.07 and a low of 104.74. In the New York session yesterday, the USD traded marginally higher against the JPY, and closed at 104.85.

The pair is expected to find its first support at 104.74 and first resistance at 105.15.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9088 against the Swiss Franc, 0.25% lower from the New York close, ahead of the Swiss jobs and consumer prices data to be released later tomorrow. During the session, the pair traded at a high of 0.9125 and a low of 0.9073. In the New York session yesterday, the USD traded marginally higher against the CHF, and closed at 0.9111.

The pair is expected to find its first support at 0.9065 and first resistance at 0.9120.

USD CAD

At 10:40 GMT, the USD is trading at 1.0838 against the CAD, 0.12% higher from the New York close, ahead of the Canadian housing data to be released later during the day, which would indicate the strength of the Canadian housing market. Meanwhile, tomorrow’s employment data from Canada would be closely followed by investors to get a fair idea about the health of the Canadian economy. During the session, the pair traded at a high of 1.0847 and a low of 1.0817. Yesterday, the USD traded 0.16% higher against the CAD in the New York session, and closed at 1.0825.

The pair is expected to find its first support at 1.0802 and first resistance at 1.0861.

AUD USD

The AUD is trading at 0.8882 against the USD, at 10:40 GMT this morning, 0.22% lower from the New York close, after building permits in Australia dropped more than market expected, highlighting continued weakness in the domestic housing market. The Aussie also fell after nation’s biggest trading partner China, posted disappointing consumer price inflation data. However, a better than expected domestic retail sales data kept the losses under check. During the session, the pair traded at a high of 0.8915 and a low of 0.8864. AUD traded 0.34% lower against the USD in the New York session, and closed at 0.8902.

The pair is expected to find its first support at 0.8846 and first resistance at 0.8935.

Gold

At 10:40 GMT, Gold is trading at $1227.22 per ounce, 0.11% higher from the New York close. This morning, Gold traded at a high of $1230.00 and a low of $1224.43 per ounce. In the New York session yesterday, the yellow metal traded 0.32% lower, and closed at $1225.90, as the greenback strengthened following a strong US jobs data that took the sheen off the metal's safe-haven appeal.

Gold has its first support at $1219.90 and first resistance at $1233.28.

Silver

Silver is trading at $19.58 per ounce, 0.26% higher from the New York close, at 10:40 GMT this morning. This morning, Silver traded at a high of $19.71 and a low of $19.45. Silver traded 0.82% lower against the USD in the New York session, and closed at $19.53.

Silver has its first support at $19.35 and first resistance at $19.78.

Crude Oil

At 10:40 GMT, Oil is trading at $92.77 per barrel, 0.30% higher from the New York close, as bargain hunters returned to the market to grab cheap valuations after crude oil prices fell yesterday. This morning, Oil traded at a high of $92.85 and a low of $92.33. Yesterday, Oil traded 1.54% lower in the New York session, and closed at $92.49. The Energy Information Administration reported a decline of 2.7 million barrels in the US crude oil stock piles for the week ended January 3.

It has its first support at $92.00 and first resistance at $93.81.

Economic Snapshot

UK trade deficit narrowed less than expected in November

The total trade deficit of the UK narrowed to £3.24 billion in November, from a revised deficit of £3.50 billion recorded in the previous month. Markets had expected the UK trade deficit to narrow down to £2.30 billion in November.

Euro-zone consumer confidence improved as previously estimated in December

The consumer confidence in the Euro-zone improved to a level of -13.6 in December, in line with preliminary expectations and from a level of -15.4 reported in the preceding month. Additionally, industrial confidence climbed to a level of -3.4 in December, trailing the market expectations for a reading of -3.3 and from a level of -3.9 reported in the preceding month. The economic sentiment indicator advanced to a level of 100.0 in December, from a downwardly revised reading of 98.4 reported in the preceding month. The services sentiment indicator rose to a reading of 0.2 in December from a downwardly revised level of -0.9 reported in the previous month. Meanwhile, the business climate indicator dropped to a level of 0.27 in December, from an upwardly revised level of 0.31 recorded in the previous month.

German industrial production rebounded more than forecast in November

On a seasonally adjusted monthly basis, industrial production in Germany rose 1.9% in November, following a 1.2% fall recorded in the preceding month. Markets had expected industrial production to rise 1.5% in November.

France trade deficit widened unexpectedly in November

France’s trade deficit widened to €5.7 billion in November, against a revised deficit of €4.8 billion recorded in the preceding month. Markets had expected France’s trade deficit to narrow to €4.6 billion in November.

Italian public deficit to GDP ratio dropped in Q3 2013

The deficit to GDP (YTD) ratio in Italy dropped to 3.7% in the third quarter of 2013, compared to a ratio of 4.1% recorded in the previous three months of 2013.

Tokyo average office vacancies advanced at a slower pace in December

The average office vacancies in Tokyo rose 7.34% in December, slower compared to a 7.52% increase recorded in the previous month.

Australia retail sales advanced at a faster pace in December

On a seasonally adjusted monthly basis, retail sales in Australia climbed 0.7% in December, compared to a 0.5% increase recorded in the preceding month. Markets were expecting retail sales to rise 0.4% in December.

Australia building approvals climbed at a slower pace in November

On a seasonally adjusted monthly basis, building approvals in Australia declined 1.5% in November, compared to a revised 1.6% decrease recorded in the previous month.

Chinese consumer price inflation rose at a slower pace in December

The consumer price inflation (CPI) in China climbed to 2.5% in December, following a 3.0% rate recorded in the previous month. Markets were expecting the consumer price inflation to rise to 2.7% in December.

 Happy pips

[marco henriques]

Weekly Forex Update

The release of a worse than expected US nonfarm payrolls report on Friday reversed the direction of the greenback and finally pushed it lower against its peers, as investors speculated how the US Federal Reserve (Fed) would react to a strong decline in the nation’s hiring, after the central bank took the bold step to scale back the size of its monthly asset purchases in the past month by $10 billion from January.

Meanwhile, the release of the Fed’s December policy meeting minutes conveyed the diminishing benefits of the monthly bond purchases to the US economy and also revealed that the policymakers were concerned about the creditworthiness of the central bank. However, it also threw light upon the worries of the policymakers about the inflation in the nation which continues to remain comfortably below the nation’s benchmark level.

Meanwhile, Fed’s regional President from St.Louis opined that the consumer prices in the US are expected to pick up in the current year. He also predicted that the US economy is expected to grow by more than 3% in 2014. Separately, Fed’s Richmond President, voiced to expect a policy rollback at the central bank’s January policy meeting similar to that of the past month.

In other economic news, ADP jobs data reported a contradictory view, indicating that the US economy added larger than expected jobs in December. Meanwhile, initial jobless claims experienced a drop for the week ended January 4, while the factory orders rebounded in November.

On the other side of Atlantic, the European Central Bank (ECB) left its interest rates unchanged and indicated to use all possible tools to foster the economic activities in the bloc should the circumstances worsen in the future. Meanwhile, Euro-zone’s economy grew at a slower pace in the third quarter, signaling the headwinds in Euro region’s economy. In a noteworthy development, the Standard & Poor's rating agency, maintained its ‘AAA’ rating for Germany.

The Sterling continued to trade in green, after the British Chamber of Commerce (BCC) in its quarterly bulletin noted the nation’s iconic recovery is expected to continue in a foreseeable future. However, a slower growth forecast report from the National Institute of Economic & Social Research (NIESR) pared the gains of the Sterling. The Bank of England (BoE), meanwhile, kept its monetary tools on hold at its policy meeting held last week.

The JPY and the Swissy traded higher against the USD. Consumer prices and jobless rate in the Switzerland remained unchanged in December. The Aussie pared its gains after the Chinese inflation and trade data weighed upon the trading prospects between the two nations.

The Loonie bucked the overall trend and dropped against the greenback, as recent batch of disappointing local macroeconomic data spurred speculation that Bank of Canada’s Governor, Stephen Poloz, might announce some easing measures to restore the economic status of the nation.

EUR USD

Last week, the EUR traded 0.51% higher against the USD and closed at 1.3672. The greenback fell after the latest nonfarm payrolls report triggered uncertainty about the health of the US labor market. However, the remarks from the ECB Chief at the central bank’s policy meeting that low inflation concerns are expected to persist in the Euro-area for a foreseeable future capped the gains in the common currency. Furthermore, a slower growth in the bloc’s gross domestic product also highlighted the lingering concerns in the Euro-zone’s economy. In economic news, services activities in most of the members of the bloc improved in December. Meanwhile, the German inflation picked up in December. However, inflation remained muted in the Euro-zone. The German industrial production and factory orders improved in November. During the week, the pair traded at a high of 1.3688 and a low of 1.3548. The pair is expected to find its first support at 1.3584, with the next support expected at 1.3496. The first resistance is at 1.3724, and the next at 1.3776.

The pair would take inspiration from the ECB’s monthly report during this week’s trading activity. Also, the final readings in the Euro-zone’s and German inflation report are expected to garner much of the market’s attention, accompanied by the bloc’s industrial production and trade balance data that would bring in many fluctuation in the pair.         

GBP USD

In the last week, GBP traded 0.29% higher against the USD and closed at 1.6474, after the BCC in its quarterly survey noted that the British economy would continue to advance at a faster pace in 2014. Also, disappointing US jobs data released on Friday weighed on the greenback. However, the gains in local currency were capped, after the NIESR estimated that the UK’s economy rose at a slower pace during the three months ending December. On the data front, services activity in the UK deteriorated in December, while Halifax house prices dropped in the similar period. Meanwhile, trade deficit in the nation shrank at a slower pace in November and the industrial and manufacturing production also declined in November. The BoE, meanwhile, kept its monetary tools unchanged in its first meeting for this year. The pair traded at a high of 1.6519 and a low of 1.6337 in the previous week. GBPUSD is expected to find its first support at 1.6368, with the next at 1.6261. Resistance exists first at 1.6550, and then at 1.6625.

The British consumer prices and retail sales are the major economic fodder from the UK that would assist traders to place their bets in the pair.   

USD JPY

The USD traded 0.44% lower against the JPY over the past week, closing at 104.01, as an unexpected decline in the US jobs data dragged the greenback southwards. In economic news, coincident index in Japan rose at a slower pace in November. Meanwhile, the leading index improved in the similar period. The pair traded at a high of 105.36 and a low of 103.83. The pair is expected to find its first support at 103.44, with the next support expected at 102.87. The first resistance is at 104.97 and the next at 105.93.

Moving forward, the Japanese industrial production, consumer confidence, machinery orders and trade balance data are the main macroeconomic triggers in Japan during the week.

USD CHF

USD traded 0.24% lower against the CHF and closed at 0.9021 in the last week. On the data front, jobless rate and consumer price inflation in Switzerland remained unchanged in December. During the period, the pair traded at a high of 0.9128 and a low of 0.9020. The first support is at 0.9033, and the next at 0.8972. Resistance exists first at 0.9141, and then at 0.9188.

The Swiss retail sales data would remain on the radar of market participants during the week. Also the traders in the Swiss Franc would track the global data points for placing their bets in the pair.

USD CAD

Last week, the USD traded 2.57% higher against the CAD and closed at 1.0891. The Loonie lost ground as a series of disappointing macroeconomic data spurred speculations that the central bank might introduce a rate cut to foster the economic activities in the nation. The jobs report noted that employment change in Canada dropped significantly in December and the jobless rate also increased in the similar period. The trade deficit widened unexpectedly in November and the nation’s manufacturing activity went into the contraction territory in the past month. Also, the Canadian housing market data suggested that a momentum is gradually slowing for home prices and construction. USDCAD traded at a high of 1.0947 and a low of 1.0608 in the previous week. The first support is at 1.0684, with the next at 1.0476. The first resistance is at 1.1023, while the next is at 1.1154.

The Canadian economic calendar is pretty light during the week, with the nation’s housing market data being the only key update, which would leave investors to rely upon the news flowing from its Southern neighbors.

AUD USD

AUD traded 0.14% higher against the USD last week, and closed at 0.8989, following the release of mixed economic data from Australia. Investors cheered a better than expected retail sales, trade balance and new home sales data, while dismal November building permits and AIG performance of service data for December disappointed. Moreover, a decline in the inflation and trade balance data in the nation’s prime trading partner, China, also dampened the trading activity between the two nations. During the week, the pair traded at a high of 0.9001 and a low of 0.8864. The first support is at 0.8902, and the next at 0.8814. The first resistance is at 0.9039, and the next at 0.9088.

The release Australian jobs data would act as a catalyst in determining the trend of the Aussie during the week. Traders would also track a string of economic data from China, Europe and the US ahead in the week.

Gold

In the prior week, Gold traded 0.72% higher against the USD and closed at USD1246.28, as a sudden drop in the US hiring data increased the demand for the gold’s safe haven appeal. The gold price also found support after the minutes of the Fed’s December policy meeting expressed concerns about the downside risks to bring in further reductions in the bond purchases, as the nation’s inflation still remained at relatively low levels in the recent past. However, a series of positive macroeconomic data from the US arrested precious metal’s rally in the past week. The ADP jobs data pointed out that US employers hired more individuals during December. Meanwhile, initial jobless benefits dropped at a quicker pace. The yellow metal traded at a high of 1248.92 and a low of 1213.03 in the previous week. Gold is expected to find support at 1223.23 and the next at 1200.19. The first resistance is at 1259.12, while the next is at 1271.97.

During the week, traders in the yellow have their plates full with various macroeconomic updates from the US, mainly the Fed’s Beige Book and inflation data.

Crude Oil

Oil prices traded 1.51% lower against the USD in the last week and closed at USD92.79, as reports that Iran would curb its nuclear activities from the end of this week calmed expectations of the continuation of the International sanction on the oil rich nation. Also, reports that the crude oil inventories in the US hit the life time high level during the past year weighed upon the commodity’s prices. The American Petroleum Institute reported a drop of 7.3 million barrels for the week ended January 3. Meanwhile, the Energy Information Administration reported a 2.7 million drop in the US crude oil inventories in the similar period. Oil traded at a high of 94.59 and a low of 91.24 in the previous week. Oil has its first major support at 91.16, while the next support exists at 89.52. The first resistance is at 94.51, and the next at 96.22.

Oil traders would rely on the developments in the Middle East for tracking the trend in the crude oil during the week. Also, the release of the macroeconomic data from the US would also influence the direction of the commodity.

Happy pips.

[marco henriques]

Forex Market Update 14Jan14

This morning the greenback cheered the introduction of a bipartisan deal which agreed to finance the nation’s government through September 2014 and further averting the possibilities of yet another US governmental shutdown. The US Dollar also remained supported after another key policymaker of the US Federal Reserve (Fed) from Atlanta backed the possibility of a further policy taper in the central bank’s next policy meeting.

Data released yesterday revealed that the monthly US budget balance posted the first surplus in six years in December, on the back of increased revenue collection from the government’s housing finance authorities. Moving forward, retail sales data is expected to drive today’s market action. Also, speeches from a couple of key policymakers from the Fed, throughout the week, would attract careful attention by the market.

A report released by the Organization for Economic Co-operation and Development, yesterday, noted that the leading economies continue to recover further, supported by growth in the US, UK and Japan.

Meanwhile, one of the European Central Bank’s (ECB) key policymaker opined that Euro-zone’s economic outlook remains improved compared to a year ago. He also dismissed the possibilities of increasing inflation or deflation in the bloc. Meanwhile, industrial production in the common currency bloc rebounded at quicker pace in November.

The Pound trimmed its gains after the nation’s inflation data pointed towards an unexpected easing trend in price pressures for December, raising speculations that the Bank of England might continue to keep its interest at current low levels.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3680 against the USD, 0.07% higher from the New York close, after industrial production in the Euro-zone rebounded at a faster pace in November. In other economic news, French current account deficit shrank in November. During the session, the pair traded at a high of 1.3700 and a low of 1.3648. Yesterday, the EUR traded marginally higher against the USD in the New York session, and closed at 1.3670.

The pair is expected to find its first support at 1.3644 and first resistance at 1.3708.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6407 against the USD, 0.11% higher from the New York close. However, the gains were trimmed as consumer prices in the UK rose at a slower pace in December, raising doubts as to whether the nation would be able to continue its iconic recovery. During the session, the pair traded at a high of 1.6450 and a low of 1.6367. Yesterday, the British Pound traded 0.27% lower versus the Dollar in the New York session, and closed at 1.6389.

The pair is expected to find its first support at 1.6347 and first resistance at 1.6468.

USD JPY

The USD is trading at 103.66 against the JPY at 10:40 GMT this morning, 0.60% higher from the New York close. The JPY lost ground after the Japanese trade deficit continued to widen November. Meanwhile, the nation’s Eco Watchers Survey outlook deteriorated in December. During the session, the pair traded at a high of 103.76 and a low of 102.99. In the New York session yesterday, the USD traded 0.49% lower against the JPY, and closed at 103.04.

The pair is expected to find its first support at 103.09 and first resistance at 104.00.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9011 against the Swiss Franc, 0.20% higher from the New York close. Investors in the Swiss Franc are expected to shift their focus on the speech by the Swiss National Bank Chief on Thursday, to extract hints on the next set of tools to be deployed by the central bank. During the session, the pair traded at a high of 0.9020 and a low of 0.8985. In the New York session yesterday, the USD traded 0.40% lower against the CHF, and closed at 0.8993.

The pair is expected to find its first support at 0.8981 and first resistance at 0.9046.

USD CAD

At 10:40 GMT, the USD is trading at 1.0897 against the CAD, 0.31% higher from the New York close. During the session, the pair traded at a high of 1.091 and a low of 1.0858. Yesterday, the USD traded 0.47% lower against the CAD in the New York session, and closed at 1.0863. The Loonie found support after the Bank of Canada’s business outlook survey noted the optimism among the nation’s businesses, citing the recent economic developments in its major trading partner, US.

The pair is expected to find its first support at 1.0848 and first resistance at 1.0938.

AUD USD

The AUD is trading at 0.9009 against the USD, at 10:40 GMT this morning, 0.45% lower from the New York close. During the session, the pair traded at a high of 0.9060 and a low of 0.9002. AUD traded 0.09% lower against the USD in the New York session, and closed at 0.9050.

The pair is expected to find its first support at 0.8978 and first resistance at 0.9064.

Gold

At 10:40 GMT, Gold is trading at $1248.90 per ounce, 0.33% lower from the New York close, amid profit booking following a recent price rise. This morning, Gold traded at a high of $1257.00 and a low of $1247.95 per ounce. In the New York session yesterday, the yellow metal traded 0.50% higher, and closed at $1252.99.

Gold has its first support at $1242.82 and first resistance at $1255.99.

Silver

Silver is trading at $20.27 per ounce, 0.70% lower from the New York close, at 10:40 GMT this morning, amid a broadly higher greenback. This morning, Silver traded at a high of $20.49 and a low of $20.24. Silver traded 1.47% higher against the USD in the New York session, and closed at $20.42.

Silver has its first support at $19.99 and first resistance at $20.52.

Crude Oil

At 10:40 GMT, Oil is trading at $92.04 per barrel, 0.50% higher from the New York close, ahead of the weekly inventory update from the American Petroleum Institute, slated to release later in the day. Investors would also focus upon the US retail sales data for determining the trend in the commodity. This morning, Oil traded at a high of $92.33 and a low of $91.50. Yesterday, Oil traded 0.56% lower in the New York session, and closed at $91.57.

It has its first support at $91.52 and first resistance at $92.47.

Economic Snapshot

UK consumer price index advanced less than expected in December

On an annual basis, consumer price index (CPI) in UK rose 2.0% in December, compared to a 2.1% rise recorded in the preceding month. Markets had expected the CPI to rise 2.1% in December.

UK ONS house price index advanced at a slower pace in November

On an annual basis, house price index in the UK rose 5.4% in November, compared to a 5.5% increase recorded in the preceding month. Market had expected the house price index to rise 5.9% in November.

UK retail price index increased in line with market expectations in December

On a monthly basis, the retail price index in the UK increased 0.5% in December, compared to a 0.1% rise recorded in the previous month.

UK input producer prices unexpectedly climbed in December

On a non-seasonally adjusted monthly basis, the producer price index (PPI) input rose 0.1% in December, compared to a 0.7% decrease recorded in the previous month. Markets had expected the PPI input to drop 0.2% in December. Additionally, the non-seasonally adjusted monthly output PPI in UK remained flat in December, compared to a 0.2% fall recorded in the previous month.

Euro-zone industrial production advanced more than forecast in November

On a monthly basis, industrial production in the Euro-zone rose 1.8% in November, following an upwardly revised fall of 0.8% recorded in the preceding month. Market had expected the industrial production to rise 1.4% in November.

German WPI fell less than forecasts in December

On an annual basis, the wholesale price index (WPI) in Germany declined 1.8% in December, compared to a 2.2% drop recorded in the previous month. Markets were expecting the wholesale price index to fall 1.9% in December.

French current account deficit narrowed in November

Current account deficit in France narrowed to €1.9 billion in November, compared to a revised deficit of €2.0 billion recorded in the previous month.

French EU norm CPI advanced less than market expectations in December

On an annual basis, EU normalized consumer price index in France climbed 0.8% in December, slower than market estimate of a 0.9% increase and following a 0.8% rise recorded in the previous month.

Italian final annual CPI climbed in line with the preliminary estimate in December

On an annual basis, the final consumer price index (CPI) in Italy rose 0.7% in December, in line with the preliminary estimate and compared to a 0.7% rise recorded in the previous month. The final yearly EU harmonized CPI in Italy increased 0.7% in December, compared to a similar rise recorded in the previous month.

US lawmakers agreed to a spending deal

The US House and Senate lawmakers agreed upon a $1.01 trillion spending deal that would fund the US government through September 30, 2014. The deal is aligned with the guidelines agreed on by Congressional leaders in December 2013.

Japan Eco Watchers Survey outlook fell in December

Eco Watchers Survey for the future outlook declined to a level of 54.7 in December, from a level of 54.8 reported in the preceding month. Additionally, Eco Watchers Survey for the current situation in Japan rose to a level of 55.7 in December, more than market expectation of an increase to 54.0 and compared to a reading of 53.5 recorded in the preceding month.

Happy pips.

[marco henriques]

Forex Market Update 16Jan14

This morning, the greenback rose against most of its key peers, as the US Federal Reserve’s (Fed) Beige Book provided a bullish outlook for the US economy. It revealed that the nation showed impressive signs of growth during the final months of 2013, on the back of increased consumer spending and factory output. It also noted that labor market in the nation too has showed tremendous signs of recovery.

Meanwhile, the Fed’s regional President from Chicago hinted that the central bank is expected to continue with its tapering process at each meeting. Against this backdrop and amid yesterday’s comments by the IMF Chief, Christine Lagarde that deflation threat continues to persist for advanced global economies, today’s domestic inflation report will attract significant market attention. Also, the weekly initial jobless claims data and manufacturing data in Philadelphia would remain on the radar of investors.

Data released this morning revealed that the inflation in Germany and Euro-zone rose in line with market expectations. Meanwhile, the European Central Bank’s (ECB) monthly report reiterated its previous stance of loose monetary stance in the Euro-area.

The Australian Dollar has continued to trade with a downward bias against the US Dollar in today’s trading session, as dismal jobs data which showed that the number of people employed in Australia unexpectedly declined for December, proved a dampener for the local currency.

Meanwhile, the Bank of Japan (BoJ) Governor, Haruhiko Kuroda stated that the central bank will maintain its aggressive easing policy until the annual inflation rate is brought to around 2%.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3618 against the USD, 0.10% higher from the New York close, reversing its previous session losses. Meanwhile, the ECB’s monthly report released today morning emphasized upon the necessity of the loose monetary policy to ensure sustainable growth in the bloc. It further stated that the Euro region is expected to experience more volatility in the money market rates. In economic news, consumer prices in Germany and Euro-zone rose in line with market expectations in December. During the session, the pair traded at a high of 1.3629 and a low of 1.3585. Yesterday, the EUR traded 0.05% lower against the USD in the New York session, and closed at 1.3605.

The pair is expected to find its first support at 1.3589 and first resistance at 1.3638.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6339 against the USD, 0.18% lower from the New York close, after house prices in the UK increased less than market expectations. With no domestic releases in store today, traders would keep a tab on domestic retail sales data, especially against the backdrop of slower than expected sales reported by the BRC last week. During the session, the pair traded at a high of 1.6377 and a low of 1.6314. Yesterday, the British Pound traded 0.21% lower versus the Dollar in the New York session, and closed at 1.6369.

The pair is expected to find its first support at 1.6289 and first resistance at 1.6414.

USD JPY

The USD is trading at 104.72 against the JPY at 10:40 GMT this morning, 0.15% higher from the New York close. The BoJ’s  Governor, Haruhiko Kuroda, reaffirmed that the central bank’s monetary stance would continue to remain accommodative until the nation’s inflation hits the 2% target. He further added that the Japanese economy’s expected moderate recovery may be affected by fluctuations in demand before and after the upcoming sales tax hike. In economic news, machine orders in Japan surged more than market expectations in November, as demand picked up ahead of April sales tax hike. During the session, the pair traded at a high of 104.94 and a low of 104.55. In the New York session yesterday, the USD traded 0.30% higher against the JPY, and closed at 104.57.

The pair is expected to find its first support at 104.31 and first resistance at 105.04.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9076 against the Swiss Franc, 0.12% lower from the New York close, ahead of the Swiss National Bank’s Chief, Thomas Jordan’s speech scheduled later during the day. During the session, the pair traded at a high of 0.9105 and a low of 0.9060. In the New York session yesterday, the USD traded 0.13% higher against the CHF, and closed at 0.9087.

The pair is expected to find its first support at 0.9054 and first resistance at 0.9104.

USD CAD

At 10:40 GMT, the USD is trading at 1.0938 against the CAD, marginally lower from the New York close. During the session, the pair traded at a high of 1.0964 and a low of 1.0927. Yesterday, the USD traded 0.13% lower against the CAD in the New York session, and closed at 1.0943. In economic news, existing home sales in Canada dropped further in December.

The pair is expected to find its first support at 1.0912 and first resistance at 1.0972.

AUD USD

The AUD is trading at 0.8788 against the USD, at 10:40 GMT this morning, 1.44% lower from the New York close, after a drastic decline in jobs in Australia in last month, making it the worst performing currency today. Meanwhile, the jobless rate in the nation remained unchanged in December. During the session, the pair traded at a high of 0.8918 and a low of 0.8776. AUD traded tad lower against the USD in the New York session, and closed at 0.8916.

The pair is expected to find its first support at 0.8731 and first resistance at 0.8890.

Gold

At 10:40 GMT, Gold is trading at $1237.62 per ounce, 0.34% lower from the New York close, as greenback continued to strengthened on the back of upbeat macroeconomic data, convincing investors that the Fed may continue taper its monthly bond purchases in the coming months. This morning, Gold traded at a high of $1244.00 and a low of $1236.45 per ounce. In the New York session yesterday, the yellow metal traded 0.35% higher, and closed at $1241.90.

Gold has its first support at $1233.33 and first resistance at $1242.95.

Silver

Silver is trading at $20.01 per ounce, 0.93% lower from the New York close, at 10:40 GMT this morning. This morning, Silver traded at a high of $20.26 and a low of $19.98. Silver traded 0.79% higher against the USD in the New York session, and closed at $20.19.

Silver has its first support at $19.88 and first resistance at $20.20.

Crude Oil

At 10:40 GMT, Oil is trading at $94.53 per barrel, 0.20% higher from the New York close, as investors booked profits following the recent rally in the oil prices. This morning, Oil traded at a high of $94.64 and a low of $93.86. Yesterday, Oil traded 1.54% higher in the New York session, and closed at $94.31, after the Energy Information Administration reported a 7.7 million barrels drop in the US crude oil inventories for the week ended January 10.

It has its first support at $93.23 and first resistance at $95.23.

Economic Snapshot

UK RICS house price balance dropped in December

The Royal Institution of Chartered Surveyors (RICS) reported that house price balance in the UK dropped to a level of 56.0% in December, following an increase of 58.0% recorded in the preceding month. Markets were expecting house price balance to rise to 60.0% in December.

Accommodative policy to continue, emphasizes ECB monthly report

The European Central Bank’s (ECB) monthly report for January reiterated that it would maintain its accommodative money policy for as long as necessary. The report further indicated that there could be more volatility in money market rates and it could rise gradually toward the main refinancing rate.

Euro-zone consumer prices rebounded in line with market estimates in December

On an annual basis, the final consumer price index in the Euro-zone increased to 0.8% in December, in line with preliminary estimates and from a rate of 0.9% recorded in the preceding month.

Germany’s final CPI climbed in line with the preliminary estimates in December

On an annual basis, final German consumer price index (CPI) advanced 1.4% in December, in line with the preliminary estimates and following a 1.3% rise recorded in previous month.

Italy trade surplus narrowed in November

The global trade surplus of Italy narrowed to €3.09 billion in November, against a downwardly revised surplus of €4.06 billion recorded in the previous month. Additionally, Italy’s (EU countries) trade surplus narrowed to €0.71 billion in November, from a downwardly revised surplus of €1.16 billion recorded in the preceding month.

Australia RBA’s foreign exchange transactions climbed in December

RBA foreign exchange transaction rose to a level of A$884.0 million in December, from a level of A$444.0 million in the previous month.

Australia’s unemployment rate remained steady in December

On a seasonally adjusted basis, unemployment rate in Australia remained unchanged at 5.8% in December, in line with market expectations and compared to a similar rate reported in the preceding month. Meanwhile, seasonally adjusted number of people employed in Australia fell by 22.6K in December, following a downwardly revised rise of 15.4K in the previous month.

Chinese foreign direct investment increased at a faster pace in December

On an annual basis, actual foreign direct investment (FDI) in China rose 3.3% in December, compared to a 2.4% rise recorded in the previous month. Markets had expected China’s actual FDI to increase 2.5% in December. On a year to date basis, FDI in China rose 5.3% for 2013, slower compared to a 5.5% rise reported for January to November 2013.

 

Happy pips.

[marco henriques]

Weekly Forex Update

During past week, the US Dollar ticked higher against its key peers, as another set of macroeconomic data pointed towards economic optimism in the US.

The Federal Reserve’s (Fed) Beige Book revealed that the US economy showed signs of healthy growth in the final months of 2013, mainly on the back of increased consumer spending, factory output and increased employment. The retail sales in the US rose more than market expectations in December. The consumer price inflation inched nearer to the target set by the central bank in the similar period. The weekly initial jobless data dropped more than market expectations for the week ended January 11. However, the University of Michigan Consumer Sentiment index experienced a drop in January.

Separately, the Fed’s outgoing Chairman, Ben Bernanke, backed the aptness of the ultra loose monetary policy to tackle the mighty recession of 2008. The Fed’s Dallas President, Richard Fisher, reiterated his previous view that the central bank could had tapered its bond purchases up to $ 20 billion. Meanwhile, Fed’s Philadelphia President stated that the central bank should seek total exit from its accommodative stance by the end of the year.

The Euro slipped against the greenback, as the European Central Bank’s (ECB) monthly report stated that lower interest rates still remains essential for the growth of the bloc. Also, a slower rise in the Euro-zone’s inflation data, cemented the central bank’s previous views of low inflationary pressure in the Euro region.

Meanwhile in the UK, a slower than expected rise in domestic inflation data increased expectations that the Bank of England (BoE) might need to postpone the decision to lift the interest rates. However, the spectacular rise in the nation’s retail sales data snapped the weekly losses in the Sterling.

The Bank of Japan’s (BoJ) Governor, Haruhiko Kuroda, voiced not to expect any reduction in the massive monetary stimulus until the nation does not hit the 2% inflation target. Market participants would now gear-up for the central bank’s first policy meeting for the year later during the week.

During the last week, the Swiss Franc traded in the red against the greenback. The Swiss National Bank’s (SNB) Chief, Thomas Jordan, reiterated the necessity of the CHF ceiling against the EUR, citing the low inflation levels.

Meanwhile, the Aussie lost ground after the jobs report showed a significant decline in the nation’s hiring. Elsewhere in China, reports released yesterday indicated that the gross domestic product, retail sales and industrial production rose at a slower pace, highlighting the economical slowdown in the second largest economy.

EUR USD

Last week, the EUR traded 1.08% lower against the USD and closed at 1.3525, after the ECB’s monthly report reiterated the necessity of lower interest rates in the common currency bloc. It also cautioned that money market rates might still remain volatile in the near future. Moreover, investors also reacted to the slower growth of the German economy. In other economic news, the final consumer prices in Germany and Euro-zone rose in line with market expectations in December. Additionally, the Euro-zone’s industrial production rebounded at quicker pace in November. Also trade surplus in the bloc widened in November, while the construction output improved in the similar period. In a noteworthy development, Moody’s rating agency upgraded its sovereign credit rating on Ireland to “Baa3”, with a “positive” outlook. Meanwhile, the Standard & Poor’s rating agency revised its outlook for Portugal to “Negative”. During the week, the pair traded at a high of 1.3700 and a low of 1.3516. The pair is expected to find its first support at 1.3461, with the next support expected at 1.3396. The first resistance is at 1.3645, and the next at 1.3764.

The ZEW statistics from the Euro-zone and Germany would remain on the radar of the market participants during the week. Also, the preliminary readings in the bloc’s manufacturing activity data would help in the evaluating the economic health of the Euro-zone.         

GBP USD

In the last week, GBP traded 0.39% lower against the USD and closed at 1.6409, as slower rise in the nation’s inflation data for the third straight month tilted the scale towards the continuation of the lower interest rates for a prolonged period by the Bank of England. However, a better than expected rise in the retail sales data in the UK during the festive season provided some relief to the downfall in the Sterling. Also, the Conference Board’s leading economic index picked up in November. Separately, one of the BoE key official voiced that real wages in the UK are expected to rise. The pair traded at a high of 1.6510 and a low of 1.6308 in the previous week. GBPUSD is expected to find its first support at 1.6308, with the next at 1.6207. Resistance exists first at 1.6510, and then at 1.6611.

The Bank of England is expected to release its latest meeting’s minutes which would provide the voting pattern of the policymakers in determining the interest rate and the size of the asset purchase. The release of the claimant count  and unemployment rate data in the UK would also attract market attention.    

USD JPY

The USD traded 0.29% higher against the JPY over the past week, closing at 104.31, amid escalating economic optimism in the world’s largest economy. During the week, the BoJ’s Governor, Haruhiko Kuroda, noted that the central bank would not stop its aggressive easing policy as long the nation does not reaches its inflation target. In economic news, Japanese trade deficit widened in November. Machine tool and machinery orders surged in Japan. Meanwhile, consumer confidence and Eco watchers outlook in Japan deteriorated in December. The pair traded at a high of 104.94 and a low of 102.85. The pair is expected to find its first support at 103.13, with the next support expected at 101.94. The first resistance is at 105.22, and the next at 106.12.

The Bank of Japan’s policy meeting would remain the key event during this week for the Yen traders. 

USD CHF

The USD traded 1.09% higher against the CHF and closed at 0.9119 in the last week. The SNB’s Chairman, Thomas Jordan, voiced that the currency ceiling of the Swiss Franc against the Euro is expected to remain for a foreseeable future, citing the low inflation levels in the nation. Retail sales in Switzerland rose 4.2% in November. Meanwhile, producer and import prices remained steady in December. During the period, the pair traded at a high of 0.9110 and a low of 0.8985. The first support is at 0.8991, and the next at 0.8925. Resistance exists first at 0.9116, and then at 0.9175.

The Swiss National Bank’s monthly statistical bulletin and the nation’s ZEW survey and trade report are the major macroeconomic triggers from Switzerland set to release ahead in the week.

USD CAD

Last week, the USD traded 0.74% higher against the CAD and closed at 1.0972, as economic data released last week from the US reinforced the view that the economic recovery is gaining enough traction in the nation for the Federal Reserve to continue tapering stimulus measures. Meanwhile, the Loonie came under pressured, amid expectations that the Bank of Canada (BoC) will stick to its dovish stance on rates at its upcoming policy meeting after a recent series of weak economic data sparked doubts over the economic outlook. Data released last week indicated that existing home sales in Canada dropped further in December, raising the speculation that nation’s housing sector is likely headed for more moderate activity in 2014. Meanwhile, the BoC’s business outlook survey noted the optimism among the nation’s businesses, amid recent economic developments in its major trading partner, US. USDCAD traded at a high of 1.0993 and a low of 1.0841 in the previous week. The first support is at 1.0878, with the next at 1.0783. The first resistance is at 1.1030, while the next is at 1.1087.

The highly awaited interest rate decision and the accompanying press conference by the Canadian central bank Governor, Stephen Poloz will be in focus tomorrow, while the nation’s inflation data for December is also expected to generate market interest.

AUD USD

AUD traded 2.39% lower against the USD last week, and closed at 0.8774, as bigger than expected drop in the nation’s jobs report in December, signaled the continuous slowdown in the economic activities in the island nation. Moreover, the jobless rate remained unchanged in the similar period. In other economic news, home loans in the nation rose in line with market expectations in November. During the week, the pair traded at a high of 0.9088 and a low of 0.8762. The first support is at 0.8661, and the next at 0.8549. The first resistance is at 0.8987, and the next at 0.9201.

The Australian consumer price data and consumer confidence is the couple of major macroeconomic updates that would be tracked by traders ahead in the week. Also, the trend in the AUD would take cues from the outcome of macroeconomic data from China.

Gold

In the prior week, Gold traded 0.58% higher against the USD and closed at USD1253.45, as robust physical demand in China ahead of the Lunar New Year aided gold prices. However, the gains in the yellow metal were limited, as a series of positive data provided a boost   to the risk appetite. Additionally, the Fed’s Beige Book gave bullish views for the US economy. Also, hawkish views from the Fed’s key policy makers kept the greenback supported. However, traders remained reluctant to take big positions in the yellow metal a week ahead of a US Federal Reserve policy meeting, when it could announce another cut to its bond-buying stimulus. The yellow metal traded at a high of 1257.00 and a low of 1234.38 in the previous week. Gold is expected to find support at 1239.55 and the next at 1225.66. The first resistance is at 1262.17, while the next is at 1270.90.

The Fed's Federal Open Market Committee (FOMC) meets on January 28-29. The Fed stated in December that it would trim its monthly asset purchases by $10 billion to a total of $75 billion per month from January. Traders focal point remains whether the Fed would reduce $10 billion at every meeting, or whether they will wait and see for a while.

Crude Oil

Oil prices traded 1.38% higher against the USD in the last week and closed at USD94.07, as global growth optimism increased the demand for the commodity, after the two of the leading world’s leading international bodies, the World Bank and the International Monetary Fund, lifted their growth outlook for the global economy. Also, a series of positive macroeconomic data from the crude oil’s biggest consumer, US, kept the crude oil prices higher. Additionally, the leading oil watchdogs, the American Petroleum Institute and Energy Information Administration, reported yet another weekly drop in the US crude oil stockpiles. Oil traded at a high of 94.94 and a low of 91.43 in the previous week. Oil has its first major support at 92.02, while the next support exists at 89.97. The first resistance is at 95.53, and the next at 96.99.

Crude oil investors would monitor how Iran goes about with its commitment to cease its nuclear programme starting from this week, in determining the trend in the commodity. Also, the global macroeconomic data points would remain a key catalyst in this week’s market action.

Happy pips.

[marco henriques]

Forex Market Update 23Jan14

This morning, the US Dollar is trading lower against most of the major currencies.

The Euro is trading on a strong footing, following the release of the better-than-expected PMI data across the Euro-zone.  The manufacturing activity of the Euro-zone rose to its highest level in almost 33 months, thereby indicating that the recovery in the region has indeed gained momentum. Meanwhile, the manufacturing activity in Germany also expanded at the highest pace since May 2011 this month. However, the French manufacturing and services PMI despite rising more than expected, remained in contraction territory.

Early today, the European Central Bank (ECB) President, Mario Draghi rose an alarm against the increased optimism about the recent recovery witnessed in the region and urged that there were still few significant risks of setbacks to the recovery.

In the UK, the Bank of England (BoE) Monetary Policy Committee (MPC) member, Paul Fisher defended the central bank’s forward guidance and signalled that the interest rate would continue to remain low, despite recent upbeat employment data.

The Canadian Dollar fell sharply after the Bank of Canada (BoC) kept its benchmark interest rate unchanged at 1.0% and indicated that the currency is still strong enough, thereby posing a competitive challenge for Canadian exports.

This morning, the Bank of Japan (BoJ) in its latest monthly economic survey indicated that the nation’s economy is likely to continue to recover moderately, mainly due to pick up in exports and business fixed investments.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3635 against the USD, 0.65% higher from the New York close, as a pick up in the manufacturing activity gauges across the Euro-zone signaled that the bloc is inching forward on the path of recovery. Also, the Euro-zone’s current account surplus widened in November. Meanwhile, the ECB President, Mario Draghi, warned against the excessive optimism about growth prospects of the Euro-zone. During the session, the pair traded at a high of 1.3647 and a low of 1.3530. Yesterday, the EUR traded 0.17% lower against the USD in the New York session, and closed at 1.3547.

The pair is expected to find its first support at 1.3561 and first resistance at 1.3678.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6595 against the USD, 0.13% higher from the New York close, as one of the BoE’s leading policy makers, Paul Fisher, backed the requirement of lower interest rates in the UK, despite the tremendous improvement in the nation’s labor market, to ensure sustainable growth. Later today, investors are expected to keep a close tab on the UK’s trade survey data released by the Confederation of British Industry. During the session, the pair traded at a high of 1.6618 and a low of 1.6557. Yesterday, the British Pound traded 0.08% higher versus the Dollar in the New York session, and closed at 1.6574.

The pair is expected to find its first support at 1.6543 and first resistance at 1.6633.

USD JPY

The USD is trading at 104.31 against the JPY at 10:40 GMT this morning, 0.22% lower from the New York close. The Bank of Japan’s monthly economic survey echoed its previous views that nation’s economy continues to recover moderately. During the session, the pair traded at a high of 104.86 and a low of 104.20. In the New York session yesterday, the USD traded 0.19% higher against the JPY, and closed at 104.54.

The pair is expected to find its first support at 104.05 and first resistance at 104.71.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.9033 against the Swiss Franc, 0.91% lower from the New York close. During the session, the pair traded at a high of 0.9135 and a low of 0.9019. In the New York session yesterday, the USD traded 0.20% higher against the CHF, and closed at 0.9116.

The pair is expected to find its first support at 0.8990 and first resistance at 0.9106.

USD CAD

At 10:40 GMT, the USD is trading at 1.1151 against the CAD, 0.59% higher from the New York close. Ahead today, the Canadian retail sales data would release at 13:30 GMT. A rebound in the retail sales may spark a short-term correction in the pair as it raises the fundamental outlook for growth and inflation in Canada. During the session, the pair traded at a high of 1.1175 and a low of 1.1082. Yesterday, the USD traded 1.11% higher against the CAD in the New York session, and closed at 1.1086. The Canadian Dollar lost momentum, after the Bank of Canada (BoC) in its monthly monetary policy meeting decided to keep its benchmark interest rate unchanged at 1.0% and indicated that a strength in the Loonie still poses a challenge to the nation’s exports.

The pair is expected to find its first support at 1.1010 and first resistance at 1.1234.

AUD USD

The AUD is trading at 0.8806 against the USD, at 10:40 GMT this morning, 0.50% lower from the New York close, after a report revealed that the HSBC manufacturing PMI in China, largest trading partner of Australia, unexpectedly declined to a reading of 49.6 in January, from a level of 50.5 registered in the previous month. On the domestic macro front, the Melbourne Institute reported that the consumer inflation expectation in Australia rose to 2.3% in December, compared to previous month’s level of 2.1%. During the session, the pair traded at a high of 0.8855 and a low of 0.8773. AUD traded 0.32% lower against the USD in the New York session, and closed at 0.8850.

The pair is expected to find its first support at 0.8758 and first resistance at 0.8869.

Gold

At 10:40 GMT, Gold is trading at $1245.11 per ounce, 0.66% higher from the New York close. However, increased speculations that the Fed would further wind down its massive stimulus for the US economy at its meeting on January 28-29, weighed on the gold prices. This morning, Gold traded at a high of $1248.27 and a low of $1231.85 per ounce. In the New York session yesterday, the yellow metal traded 0.35% lower, and closed at $1236.90, as concerns over a slowdown in physical demand of gold in China.

Gold has its first support at $1235.22 and first resistance at $1251.64.

Silver

Silver is trading at $20.10 per ounce, 1.53% higher from the New York close, at 10:40 GMT this morning. However, gains were kept in check as disappointing Chinese manufacturing PMI data raised the speculation that industrial demand for white metal from the nation may slow down. This morning, Silver traded at a high of $20.17 and a low of $19.66. Silver traded 0.32% lower against the USD in the New York session, and closed at $19.80.

Silver has its first support at $19.78 and first resistance at $20.29.

Crude Oil

At 10:40 GMT, Oil is trading at $96.67 per barrel, tad lower from the New York close, after the International Energy Agency (IEA) reported that the world oil consumption is expected to increase by 1.3 million bpd this year, 50,000 bpd higher than earlier forecast. Also, the American Petroleum Institute (API) stated that US crude inventories rose by 4.86 million barrels in the week ended January 17. The prices also came under pressure, after data indicated that China’s HSBC Flash purchasing managers’ index fell to a six-month low in January. This morning, Oil traded at a high of $96.90 and a low of $96.41. Yesterday, Oil traded 1.30% higher in the New York session, and closed at $96.69.

It has its first support at $95.69 and first resistance at $97.27.

Economic Snapshot

Euro-zone’s PMI rises more than forecast in January   

The preliminary manufacturing PMI in the Euro-zone increased to a reading of 53.9 in January, following a revised reading of 52.7 in the previous month. Meanwhile, preliminary services PMI in the Euro-zone rose to reading of 51.9 in January, from a reading of 51.0 in the previous month.

Euro-zone’s current account surplus widened in November

The seasonally adjusted current account surplus of the Euro-zone widened to €23.5 billion in November, from an upwardly revised surplus of €22.2 billion recorded in the previous month.

ECB Draghi cautioned against the excessive optimism over Euro-zone recovery

The European Central Bank (ECB) President, Mario Draghi, in an interview, warned against excessive optimism as the Euro area recovery still remains weak and uneven and faces risk of setback. He further stated that “inflation and deflation risks are limited” and the central bank has sufficient instruments available to ensure price stability.

German manufacturing PMI advanced more than expectation in January

The preliminary manufacturing PMI in Germany increased to reading of 56.3 in January, following a reading of 54.3 in the previous month. Market had expected the index to rise to 54.4 in January. Meanwhile, the preliminary services PMI in Germany increased to reading of 53.6 in January, from a reading of 53.5 in the previous month.

French manufacturing and services PMIs rose more than expected in January

The preliminary manufacturing PMI in France climbed to a reading of 48.8 in January, from a reading of 47.0 recorded in the previous month. Market had expected the index to rise to a reading of 47.5 in January. Meanwhile, the preliminary services PMI rose to a reading of 48.6 in January, from a reading of 47.8 reported in the preceding month. Market had expected the index to rise to a reading of 48.1.

Spain’s unemployment rate climbed more than forecast in Q4 2013

The unemployment rate in Spain rose to 26.03% in Q4 2013, compared to a rate of 25.98% reported in Q3 2013. Markets were expecting the unemployment rate to rise to 26.00% in Q4 2013.

Japanese economy continued to recover moderately: BoJ monthly economic survey

The Bank of Japan (BoJ) in its latest monthly economic survey indicated that the nation’s economy is likely to continue to recover moderately, mainly due to pick up in exports& business fixed investments. However, the report indicated that the recovery path is expected to be affected by the front loaded rise and subsequent decline in demand prior to and after the consumption tax hike.

Australia consumer inflation expectation rose in January

The consumer inflation expectations in Australia climbed to 2.3% in January, compared to a rate of 2.1% recorded in the previous month.

Chinese Markit flash manufacturing PMI dropped in January

The flash manufacturing PMI in China fell to a reading of 49.6 in January, compared to a final reading of 50.5 reported in the previous month. Market had expected the index to fall to a reading of 50.4 in January.

Happy pips.

[marco henriques]

Forex Market Update 24Jan14

 

This morning, the greenback is trading mixed against its key peers, as investors reacted to yesterday’s lackluster macroeconomic data from the US. The weekly initial jobless claims increased in the past week. Meanwhile, the manufacturing activity in the nation rose at a slower pace in current month. The economic activity in Chicago deteriorated in December. Moreover, the existing home sales and the Conference Board’s leading economic index rose at a slower pace in December.

Market participants would now gear up for the US Federal Reserve’s (Fed) policy meeting in the next week, amid rising speculation that the Fed might introduce second policy taper, ignoring the recent disappointing jobs data. 

The Euro is trading lower against the USD, amid lack of decisive economic triggers from the Euro bloc. Investors will closely scrutinize a speech by from the European Central Bank’s (ECB) Chief, Mario Draghi, to get cues on the action plan of the central bank to shrug off the low inflationary pressures in the bloc.

The Pound is trading lower, after data released this morning showed a weaker than expected rise in the UK mortgage approvals for December. Yesterday, the Bank of England (BoE) Governor, Mark Carney, at the World Economic Forum stated that he sees no immediate necessity to lift the interest rates, despite robust performance of the UK’s labor market. The Pound traders would now closely eye another speech from the Governor ahead today.

The Aussie experienced a sell-off after the one of the Reserve Bank of Australia’s (RBA) key policymaker, voiced that an exchange rate of 80 US cents might be helpful in supporting the island country.

EUR USD

This morning at 10:40 GMT, the EUR is trading at 1.3671 against the USD, 0.18% lower from the New York close, ahead of the ECB’s Chief, Mario Draghi’s speech scheduled later during the day. In economic news, retail sales in Italy rebounded in December. During the session, the pair traded at a high of 1.3706 and a low of 1.3662. Yesterday, the EUR traded 0.41% higher against the USD in the New York session, and closed at 1.3695, after the consumer confidence in the Euro-zone improved in January.

The pair is expected to find its first support at 1.3629 and first resistance at 1.3710.

GBP USD

At 10:40 GMT, the GBP is trading at 1.6617 against the USD, 0.13% lower from the New York close, ahead of the BoE’s Governor, Mark Carney’s speech scheduled later during the day. On the data front, the BBA mortgage approvals increased at a pace slower-than-expected in December. During the session, the pair traded at a high of 1.6670 and a low of 1.6607. Yesterday, the British Pound traded 0.23% higher versus the Dollar in the New York session, and closed at 1.6638. The BoE Governor, at the World Economic Forum in Davos, echoed the similar views of the central bank’s policy minutes that there is no need to raise the interest in the UK.

The pair is expected to find its first support at 1.6577 and first resistance at 1.6663.

USD JPY

The USD is trading at 102.68 against the JPY at 10:40 GMT this morning, 0.59% lower from the New York close. Yen traders would closely watch the slew of domestic macro economical data to be released during the next week, especially the BoJ’s minutes of its latest policy meeting and the national consumer price index for December. During the session, the pair traded at a high of 103.60 and a low of 102.52. In the New York session yesterday, the USD traded 0.75% lower against the JPY, and closed at 103.28.

The pair is expected to find its first support at 102.01 and first resistance at 103.85.

USD CHF

This morning at 10:40 GMT, the USD is trading at 0.8960 against the Swiss Franc, 0.16% lower from the New York close. Amid a relatively light economic calendar next week, Swiss Franc traders would likely shift their focus to global indicators to get further guidance in the pair. During the session, the pair traded at a high of 0.8993 and a low of 0.8949. In the New York session yesterday, the USD traded 0.68% lower against the CHF, and closed at 0.8974. The CHF found support after the Swiss government approved the Swiss National Bank’s request to hike the reserve requirements of the banks in the nation to check the country’s ballooning housing market.

The pair is expected to find its first support at 0.8926 and first resistance at 0.9017.

USD CAD

At 10:40 GMT, the USD is trading at 1.1072 against the CAD, 0.24% lower from the New York close, ahead of the Canadian inflation data to be released later during the day. During the session, the pair traded at a high of 1.1139 and a low of 1.1053. Yesterday, the USD traded 0.30% lower against the CAD in the New York session, and closed at 1.1099. The Loonie inched higher after the retail sales data in Canada rebounded at a faster pace in November.

The pair is expected to find its first support at 1.1027 and first resistance at 1.1143.

AUD USD

The AUD is trading at 0.8677 against the USD, at 10:40 GMT this morning, 1.04% lower from the New York close, after one of the RBA’s Board Members opined that an exchange rate of around 80 US cents is favorable for the Australian economy. During the session, the pair traded at a high of 0.8777 and a low of 0.8665. AUD traded 0.10% lower against the USD in the New York session, and closed at 0.8768.

The pair is expected to find its first support at 0.8625 and first resistance at 0.8769.

Gold

At 10:40 GMT, Gold is trading at $1260.05 per ounce, 0.35% lower from the New York close, as jitters of a second consecutive policy taper from the US Fed kept investors away from the yellow metal. This morning, Gold traded at a high of $1265.00 and a low of $1256.96 per ounce. In the New York session yesterday, the yellow metal traded 1.23% higher, and closed at $1264.47, as a barrage of disappointing macroeconomic data in the US weighed on the greenback.

Gold has its first support at $1247.59 and first resistance at $1269.51.

Silver

Silver is trading at $19.99 per ounce, 0.19% lower from the New York close, at 10:40 GMT this morning. This morning, Silver traded at a high of $20.12 and a low of $19.95. Silver traded 0.35% lower against the USD in the New York session, and closed at $20.03.

Silver has its first support at $19.85 and first resistance at $20.22.

Crude Oil

At 10:40 GMT, Oil is trading at $96.68 per barrel, 0.70% lower from the New York close. In a key development, the Iranian President at the World Economic Forum pledged to introduce new investment models for oil contracts by September. This morning, Oil traded at a high of $97.80 and a low of $96.61. Yesterday, Oil traded 0.45% higher in the New York session, and closed at $97.40. The Energy Information Administration (EIA) reported that the US crude oil stock piles gained 1.0 million barrels for the week ended January 17.

It has its first support at $96.22 and first resistance at $97.49.

Economic Snapshot

BBA mortgage approvals in UK increased lesser than expectations in December

The BBA mortgage approvals in the UK rose to a level of 46.5K in December, against a market expectation of a level of 47.3K and compared to a reading of 45.4K reported in the previous month.

Retail sales in Italy advanced in November

On a non-seasonally adjusted annual basis, retail sales in Italy rose 0.1% in November, compared to a 1.6% decline recorded in the preceding month. On a seasonally adjusted monthly basis, retail sales in Italy remained flat in November, in line with market expectations and following a 0.1% decrease in the previous month.

Producer price index in Spain rebounded in December

On an annual basis, the producer price index (PPI) in Spain rose 0.6% in December, compared to a 0.5% upwardly revised fall recorded in the preceding month.

Happy pips.