US Durable good orders in December came in above expectations at 5.2%. Economists cannot agree on whether the Fed will cut 25 or 50bp after the better durable goods announcement. Retail sales in the UK continue to be disappointing and have decreased to the weakest point since November 2006.
News and Events:
US Durable good orders in December came in above expectations at 5.2%. Although US Consumer Confidence was lower than December, it was 87.9, higher than the expected 87.0. Economists cannot agree on whether the Fed will cut 25 or 50bp after the better durable goods announcement. Given the volatile nature of the markets right now, a 50bp cut would be in line with the status quo. The markets are predicting an 86% chance of a 50bp cut. The Euro has been in a tight range, trading between 1.4738 and 1.4800.
The survey of Canadian business conditions indicates that manufacturers are at a five-year low in optimism for production prospects. The USDCAD traded below 1.0000 for the second time on rising commodity prices and a possible growing interest rate differential between US and Canadian rates.
Retail sales in the UK continue to be disappointing and have decreased to the weakest point since November 2006. Credit market pressures and slower economic growth have contributed to the weakness in the British Pound.
Today’s Key Issues (time in GMT):
09:00 EUR Bloomberg Eurozone Retail PMI JAN
09:00 EUR Bloomberg Germany Retail PMI JAN
09:00 EUR Large Company Empl. Nsa (YoY) NOV
09:00 EUR Bloomberg Italy Retail PMI JAN
09:00 EUR Bloomberg France Retail PMI JAN 51 vs 49.1
09:30 GBP M4 Money Supply (MoM) DEC F
09:30 GBP M4 Money Supply (YoY) DEC F
09:30 GBP M4 Sterling Lending (BP) DEC F
09:30 GBP Net Consumer Credit DEC 1.1B vs 1.1B
09:30 GBP Net Lending Sec. on Dwellings DEC 7.5B vs 7.8B
09:30 GBP Mortgage Approvals DEC 79K vs 83K
12:00 USD MBA Mortgage Applications Jan-25
13:15 USD ADP Employment Change JAN 40K vs 40K
13:30 USD GDP Annualized 4Q A 1.20% vs 4.90%
13:30 USD Personal Consumption 4Q A 2.70% vs 2.80%
13:30 USD GDP Price Index 4Q A 2.60% vs 1.00%
13:30 USD Core PCE QoQ 4Q A 2.50% vs 2.00%
19:15 USD FOMC Rate Decision Jan-30 3.00% vs 3.50%
The Risk Today:
EurUsd looking to hit a triple-top just above 1.4900. If this level is broken, the door is wide open to 1.5000. On the downside, the range support holds at 1.4311.
GbpUsd continues to hold firm after breaking out of its downward channel. The near-term target is 2.0137, while minor support holds at 1.9765. Traders watch for 1.9710 (the upper trend line on the downward channel) for a possible Winnipeg trade.
UsdJpy consolidation continues at 106.51. A breakout above 107.90 could see the pair trading to 110.15. A break down through the Jan 23rd low of 104.97 is very bearish and exposes targets of 104.22 and 102.00.
UsdChf a break down trough 1.0840 would be extremely bearish. There is consolidation at 1.0900. Traders are looking to catch a breakout of the past few days� range.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland