FX News Today

Cleveland Fed hawk Mester saw “a little more downside risk” to the U.S. economy than when the Fed hiked in December in remarks earlier after the NY close, though when pressed about the market sell-off in January, she said “you can read too much into volatility.” That makes it 4 out of 5 Fedspeakers this week mulling greater downside risk, which will help keep the dollar on the defensive. Between NIRP in Japan and easy money promises from the ECB and now a unanimous BoE in favor of steady policy it appears the FX wars are in full swing. USDJPY is near session and one month lows of 116.60 after completely erasing the rate cut surge to 121.68 on Jan-29.

Reserve Bank of Australia said low inflation may provide scope for easier policy, not surprisingly repeating a key line from Governor Stevens’ statement earlier this week that accompanied the lack of change in the 2.00% rate setting. The growth and inflation projections in the quarterly Statement on Monetary Policy were not substantially different from the previous statement released last November. Underlying inflation is expected to remain low over the forecast period. They note that the recent improvement in the labour market was not expected in November, and could be providing information about the economy not apparent in the national GDP figures. Or the recent strength in the labour market will be followed by a pull-back. Meanwhile, China’s growth outlook is pegged as a sizable source of uncertainty for Australia’s outlook. The AUD is adjusting to lower commodity prices, with the weaker currency benefiting export related industries. Separately, retail sales were flat in December after a 0.4% m/m gain in November, undershooting expectations. Sales volumes grew 0.6% in Q4 (q/q, sa) after the 0.5% gain in Q3.

US same store sales dipped 0.5% y/y in January, according to Johnson Redbook, after a 0.9% y/y December gain. Apparel paced the weakness with a 3.0% y/y decline, followed by miscellaneous (-2.0% y/y) and drugs (-1.4% y/y), probably on promotions and price declines. Same store sales excluding drugs were down 0.3% y/y. Discounters outperformed with a 0.7% annual gain, while clubs were unchanged. All stores posted a 1.5% y/y gain last month, versus 2.6% y/y in December. This is another manifestation of the slowdown in momentum over the turn of the year. January retail sales will be reported a week from Friday and we’re projecting a 0.1% headline gain, and a flat ex-auto reading.

Main Macro Events Today

• US Employment: January employment is out today and we expect the headline to reveal a 200k (median 198k) increase for the month. This is below the 292k December increase and the headline faces downside risk from a weaker claims path and deteriorating producer sentiment.
• Canada Employment: We expect employment to rise 10.0k in January (median 5.0k) after the 22.8k gain in December. Of course, momentum was lacking in the economy going into the new year (unless you were an auto dealer), which could restrain job creation. An as-expected gain would be welcome news given what should be a stall out in GDP growth during Q4, but the report is unlikely to significantly alter the views of those calling for a near term rate cut.
• Canada Ivey PMI: The Ivey PMI is expected to improve to a seasonally adjusted 51.0 in January from 49.9 in December. The Ivey PMI saw a three month trailing average of 55.5 in December from 56.8 in November. The 3-month average has been falling since the 58.8 in June of 2015, but remains comfortably inside expansionary territory, consistent with a rebound in GDP during the first half of 2016 depressed in January.

 

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

Wednesday Trade was Pips Galore for FX Traders!

The U.S. Dollar Index dropped to multi month lows in the wake of disappointing U.S. ISM data, although the ADP employment data was not all that bad. However, the weak ISM report was enough to overwhelm the USD longs.

The EURUSD finally broke out of its multi week trading range and jumped +200 pips to close above 1.1100 for the first time since August 2015 . The EURUSD market has been looking for an excuse to annoy Mario Draghi at the ECB and take the EUR higher, and yesterday’s sluggish U.S. economic data was the kind of catalyst that the market has been looking for.

Oil prices rallied up $3 to close at $32.70 up nearly 7% for the day. The sharp move in oil price helped to support commodity related currencies with the CAD surging gains against the USD which pushed the USDCAD lower by over +260 pips to close near the 1.3780’s and the AUD moving higher by +130 pips.

The GBP broke to the upside and climbed 200+ pips during Wednesday trade, ahead of today’s “BoE’s Super Thursday” with the inflation report to be published alongside the minutes and the policy announcement.

Today’s European calendar has ECB economic bulletin, ECB speech from Draghi. The U.S. calendar has weekly jobless claims, prelim Q4 productivity, and factory orders. While the Canadian calendar quiet, employment, trade and Ivey PMI all due Tomorrow.

Main Macro Events Today

• EUR ECB President Draghi’s Speech: Draghi sends dovish signal. Speaking at a conference in Frankfurt the ECB head said monetary policy can’t be relaxed about the series of supply shocks, adding that Euro-area challenges are no reason for ECB inaction and that adopting a wait and see attitude would carry risks and that “the risks of acting too late outweigh the risks of acting too early”.

• GBP BoE Interest Rate Decision: BoE expected to keep policy on hold, focus on minutes and inflation report.

• USD U.S. Initial Jobless Claims: U.S. initial jobless claims are expected to be 268k (median 280k) in the week-ended January 30.

• USD Prelim Non-farm Productivity: Q4 nonfarm productivity should be -3.5% in the first release from 2.2% in Q3.

• USD Factory Goods: December factory orders are expected to decline 3.0% with inventories up 0.3%. Forecast risk: downward, given the weaker top line durable inventory numbers. Market risk: downward, as weaker data could impact the path of rate hikes.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FX News Today

The latest U.S. economic reports are suggesting a risk that U.S. 4th quarter Gross Domestic Product (GDP) may drop to a negative level, after weakness in construction spending and weakness in personal income were reveled in the latest batch of U.S. data. The USD pulled back slightly with stock markets closing slightly lower following China’s lead, and as oil prices gave back some recent gains.

The ECB President Mario Draghi has kept the course that the ECB is prepared to use all available resources to keep the Eurozone on track, while he presented the ECB’s annual report yesterday. The markets seem to be testing the creditability of the ECB President as the EUR continues to hold ground.

The European calendar has German and Eurozone labour market data, Eurozone producer price inflation, the U.K. Construction PMI and Swiss retail sales on tab this morning.

The JPY is seeing some renewed strength as markets shift back into the risk-off mode, which is being led by oil price declines. Falling Oil prices, along with ongoing concerns about slowing economic activity in China, has weighed on most stock markets.

The commodity currencies are under some pressure again, as both the AUD and CAD, showing slight declines versus the USD.

The Reserve Bank of Australia (RBA) left interest rates unchanged at 2.00% during its policy review, but governor Stevens said that while policy will remain data and event driven, “continued low inflation may provide scope for easier policy.” This comment is seen adding to pressure on the AUD in earlier trade today.

The U.S. economic calendar is rather thin today. January auto sales are expected to continue on their solid, near record pace. Weekly chain store sales figures and the February IBD/TIPP economic optimism index are also due. The Fed hawk George will speak on the economy from Kansas City.

Main Macro Events Today

• AUD Australian Interest Rate Decision: Reserve Bank of Australia held rates steady at 2.00%, as expected. Governor Stevens was largely constructive on domestic growth, saying that the expansion in the non-mining parts of the economy strengthened in 2015 while employment growth pick-up even while measured GDP was below average. Inflation is expected to remain low over the next year or two. Accommodative policy is appropriate, he said, given these conditions. Low rates are supporting demand, but regulatory measures are working to contain risks in the housing market, he assured. On the exchange rate, he said it “has continued its adjustment to the evolving economic outlook.” The board decided that prospects for continued economic growth were “reasonable,” with inflation close to target. Hence, monetary policy was held steady. Policy remains, not surprisingly, data and event driven as the bank will follow new information to see if the improvement in the job market is sustainable and if “recent financial turbulence portends weaker global and domestic demand.” Notably, Stevens said that “continued low inflation may provide scope for easier policy” should that be needed to support demand.

• EUR German Unemployment Data: Confidence indicators may have come off highs, but remain in expansion territory and Markit said companies are sitting on a large amount of unfulfilled orders, which should keep production and employment growth going against global headwinds at least for now. The labor market is improving not just in Germany and the overall Eurozone Dec unemployment rate is expected to fall to 10.4% from 10.5%.

• USD U.S. Auto Sales: U.S. light vehicle sales in January are expected to edge up 0.5% to 17.3 mln from 17.2 mln in December. Forecast risk: downward, as there is a chance of a correction after summer and fall strength. Market risk: downward, as weakness could impact the path of rate hikes.

U.S. equities will be in the spotlight today with the corporate earnings calendar reporting from ADT, AMG, Ally Financial, Archer Daniels Midland, Baxter Int’l, BP, Chipotle, CIT, Dow Chemical, Edwards Lifesciences, Emerson Electric, Exxon Mobil, Ferrari, Imperial Oil, Pentair, Pfizer, Sirius, UBS, UPS, and Yahoo!

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.