Daily Fundamental Dose: 16 – January – 2018
Hello Traders,
Monday’s U.S. holiday and fewer economic details from rest of the globe couldn’t restrict the forex market volatility as hawkish comments from ECB & BoE policymakers, coupled with oil spill at East China Sea, offered enough of moves to please global traders. However, the US Dollar Index (I.USDX) had to gulp down fourth consecutive negative closing as signals for monetary policy tightening at elsewhere in developed world economies hurt the greenback’s demand. The ECB Governing Council member, Ardo Hansson, said that the central-bank shouldn’t have any problems in closing asset purchase at one go after September while BoE’s MPC member, Silvana Tenreyro, forecasted increase in productivity and strong economy while going forward. As a result, the EUR and GBP managed to extend their recent upsides while JPY maintained its last week’s strength on speculations concerning monetary policy tightening by the Bank of Japan. Further, news of oil spill being wild near East China Sea offered additional upside to the Crude prices whereas weaker USD and stronger commodity basket kept fueling the Gold, AUD, NZD and CAD.
During early Tuesday, when US traders are scheduled to comeback after extended weekend, market moves were in favor of the US Dollar after Japan’s Finance Minister, Taro Aso, said sudden increase in JPY value seems problematic, which in-turn dragged the JPY down for the first time in nearly seven days. The Crude prices also witnessed some profit-booking as energy traders assume return of US players to be negative for short-term after the nation registered increase in rig counts at the end of last-week. However, EUR, GBP, AUD and CAD continued their north-run while NZD dipped a bit after NZIER Business Confidence flashed the least reading in more than two-years.
At the economic front, monthly readings of UK CPI, US Empire State Manufacturing Index, Australian Westpac Consumer Sentiment and Japan’s Core Machinery Orders are likely to grab market attention. Among them, UK CPI could receive highest eye-share as recent hawkish comments from BoE policymaker might be justified if the headline inflation gauge defy its 3.0% forecast and surpass the prior 3.1%. In case of the US Empire State Manufacturing Index, the manufacturing indicator is likely to please greenback buyers with 18.5 mark against 18.00 prior while forecast of dip in Japanese Core Machinery Orders can trigger the JPY’s downturn. At the end, AU Westpac Consumer Sentiment has recently pleased the Aussie Bulls and if it continue doing the same, the AUD has limited scope to decline.
Other than economic calendar, political plays at EU & UK are also likely to entertain global investors as two-day debate at British House of Commons, relating to EU Withdrawal Bill will start from today and the UK PM, Theresa May, might find it hard to gain support for her proposal. At EU, German Chancellor Angela Merkel’s future as the leader of EU’s largest economy seems in problems if her grand coalition to remain in power undermines some of her authorities for which latest developments and this weekend’s meet of various political leaders is crucial to watch.
Technical Talk
GBPUSD’s latest surge is still left to clear the 1.3820-40 resistance region, which can help it visit the 1.3900 mark. As a result, overbought RSI might play its role in dragging the pair back to 1.3730 & 1.3650. Further, USDCHF has to conquer 0.9660 & 0.9700 in order to justify its strength otherwise it can re-test 0.9600 and the 0.9550 rest-points. At the end, AUDJPY recently took a U-turn from the near-term horizontal resistance-zone of 88.40-45 and may re-test 88.10 and the 87.50 supports while an upside break of 88.45 may propel the quote further towards 88.80 & 89.10.
Have a nice trading-day ……