Japan’s GDP advanced the most since March 2008, while the Euro continues to come under selling pressure as traders await a bailout announcement for Greece.
[U][B]Key Overnight Developments[/B][/U][B]
• EUR/USD Extends Three Day Decline
• Japan’s GDP Accelerates in the Fourth Quarter
[/B][U][B]Critical Levels [/B][/U]
The EUR/USD extended its three day decline to reach an intraday low of 1.3602, with the relative strength index tumbling to oversold territories. The British Pound slumped on the day, shedding as much as 0.37% against the greenback. We remain short EURUSD at 1.4881 and GBPUSD at 1.5765.
[U][B]Asia Session Highlights[/B][/U]
[B]Japan’s economic growth[/B] in the fourth quarter soared 1.1% from a revised 0.0% the quarter prior amid expectations of 0.9%, and was fueled by a revival in global trade. At the same time, the economy grew an annualized 4.6% in the three months ending December 31st, the Cabinet Office in Tokyo announced today. Looking at the breakdown of real household consumption, durable goods surged 8.9%, while direct purchases in the domestic market by non-residents slipped 0.4% to taper the advance. Going forward, investors are weighing in a zero percent chance that the [B]Bank of Japan[/B] will raise borrowing costs at its rate decision meeting on Wednesday, February 17th, according to the Credit Suisse overnight interest rate swaps as the central bank aims to cement economic recovery. Meanwhile, N[B]ew Zealand’s Performance Services[/B] Index fell to 53.1 from a downward revision of 54.4, marking the third consecutive monthly increase (a reading above 50 indicates services industries are expanding).
[U][B]Euro Session: What to Expect[/B][/U]
Taking a look at the economic docket, the calendar is fairly tame in the European hours. [B]Switzerland’s producer & import price[/B] index headlines the European session, with the reading expected to have advanced 0.2% in January from the month prior, with the annualized reading forecasted to decline 1.5%. Overnight, the euro continues to trade lower as many investors speculate a formal bailout announcement for Greece, leading the euro to push lower for a fourth successive day, with the [B]EURUSD[/B] currently trading at 1.3602, and the RSI falling to 28. Meanwhile, the Kiwi dollar is the only major currency up against the buck, rising 0.03%, while the Swiss franc leads the decline, plunging 0.34%.
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Written by Michael Wright, DailyFx Research
Questions? Comments? Email me at <[email protected]>[/B][/I]