FX News Today

The yen has held firm amid a moderate risk-off theme in Asia, where stock markets traded mostly lower after Wall Street’s best-in-eight-weeks three-day rally came to an end. USDJPY dipped to a four-day low at 112.71, while the equity market correlative AUDJPY cross fell 1.9%. Both USDJPY and AUDJPY still remain comfortably above trend lows, while most of the main Asian equity indexes are still about 3% higher on the week despite today’s declines. Oil prices are down about 1% but remain a good 20% or so above trend lows. Japanese data today were discouraging, with the all Industry activity index falling 0.9% m/m in December, below the -0.3% median forecast, while department store sales tumbled 1.9% y/y in January.

BoE MPC’s Weale is concerned about market expectations regarding when the central bank will hike interest rates. He remarked in an interview with the Irish Times that “I would be surprised if people had to wait as long as markets are currently implying,” although he added that “markets may well turn out to be right.” BoE deputy governor Cunliffe also described yesterday this as unwarranted, which caused sterling to rally, although the latest survey from Reuters found a consensus among market economists expecting the a tightening by around the end of this year. Weale argued that the disinflationary effects of last sterling strength “is not an effect that is going to last forever,” and that “if we look at core measures of inflation, those are closer to the target but still below the target.” He said that wage pressure as a key issue. While prospects of BoE tightening remain in the distance, Cunliffe and Weale’s interjections are clearly aimed at balancing the market narrative.

SF Fed’s Williams has not really changed his outlook on the US or the global economy, despite the recent fluctuations, he said, adding that he will adjust his views on conditions and the policy path with more data. The “daily dives” in equity markets are not accurate reflections of the economy and shouldn’t be viewed as “the four horsemen of the apocalypse.” Growth is still estimated in the 2.25% area for the year and the unemployment rate should dip further and hit 4.5% by later in the year. He is not happy about the inflation rate but expects it to return to 2% over the next 2 years. He is monitoring potential risks and “closely watching” developments abroad. This isn’t anything new from Williams, and he is not a voter this year.

Yesterday’s US reports were encouraging on net, though with diverging signals from a tightening in initial claims but with big February Philly Fed component declines and a 0.2% January leading indicators drop. For claims, we saw a 7k decline to just 262k in the BLS survey week to leave a 23k two-week drop that reversed elevated holiday levels and left upside risk for our 190k February payroll estimate. For Philly Fed, the slight headline rise to -3.5 accompanied a sharp ISM-adjusted drop to a 45.5 three-year low thanks to declines in every component.

Main Macro Events Today

• US Consumer Price Index: the January headline CPI is expected to decline 0.1%, while the core index rises 0.1%. Forecast risk: downward, as further weakness in gasoline prices could weigh. Market risk: downward, as inflation undershoots may affect the timing of additional rate hikes.

• Canada Retail Sales: are expected to fall 1.0% in December after the 1.7% surge in November. The ex-autos sales aggregate is seen declining 0.7% m/m in December after the 1.1% bounce higher in November. An as expected drop in total retail sales that is accompanied by a similar sized pull-back in the “real” (price adjusted) sales basis would partly counter the firm manufacturing and wholesale shipment gains seen in December. We expect an 0.2% gain in December GPD.
• Canada CPI: We expect the CPI, due today, to expand at a 1.7% y/y pace in January, accelerating slightly from the 1.6% growth rate in December. CPI is seen falling 0.1% month comparable basis in January after the 0.5% plunge in December. Gas prices fell 7.0% in January compared to December, which is expected to weigh on month comparable CPI.

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

China’s CPI improved to a 1.8% y/y growth rate in January, slightly slower than expected following the 1.6% y/y rate of increase in December. CPI is gradually accelerating, with January’s growth rate the fastest since August of 2015’s 2.0%. PPI improved to a -5.3% y/y rate of contraction, nearly as expected following the 5.9% y/y rate of decline in December. The climb in annual CPI growth (albeit to still modest rates) and reduction in the pace of PPI decline suggests there could be some stabilization in China’s economy, although policy makers have a long way to go to tame overcapacity.

Australia’s unemployment rate climbed higher in January as full-time employment disappointed and dropped most for three years. This is seen signaling diminishing stimulus from record-low interest rates and a weaker currency. Jobless rate rose to 6% from 5.8% while markets expected the rate to be 5.8%. Employment fell 7,900 from December while consensus forecast was a 13,000 gain.

FOMC minutes: “many” were concerned over increased downside risks, especially amid uncertainties over economic conditions abroad, financial market stability, and inflation. That uncertainty was a large part of the decision not to assess the balance of risks. Further tightening of financial conditions could amplify the downside risks, while recent developments suggested risks were no longer balanced. The minutes noted the encouraging signs in the labor market, but data on spending and production were disappointing. Additionally, oil and commodity price declines and the firmer dollar were seen keeping inflation low over the near term. And there was a wide range of outlooks for the medium term, with recent developments having “many” now seeing a more uncertain outlook on prices, with risks pointed to the downside. The slowdown in China was seen impacting emerging markets, and together could lead to more of a drag on the US There weren’t any major surprises in the minutes given what had occurred prior to the January 26, 27 meeting, and the subsequent policy decision/statement.

Saudi Arabia’s credit rating was cut to A- from A+ by S&P amid the rout in oil, with the outlook revised to “stable” from “negative.” This is the second cut in 6 months as the rating was trimmed to A+ from AA- in late October. The ratings agency said “The decline in oil prices will have a marked and lasting impact on Saudi Arabia’s fiscal and economic indicators given its high dependence on oil.” Oil was trading near $50 at the time of the October review.

Main Macro Events Today

• ECB Monetary Policy Meeting Accounts: are due today and contain an overview of financial market, economic and monetary developments. It’s followed by a summary of the discussion, in an unattributed form, on the economic and monetary analyses and on the monetary policy stance. The accounts offer a fair and balanced reflection of policy deliberations.

• US Initial Jobless Claims: Claims data for the week of February 13th should reveal an increase in the headline to 274k (median 275k) from 269k last week and 285k in the week before that. Claims data is typically volatile through the holiday season but as we begin to move past that we expect to see the February average improve to 273k from 284k in January and 277k in December.

• US Philadelphia Fed Index: February Philly Fed is out today and should reveal a headline increase to -3.0 (median -2.8) from -3.5 in January. The already released Empire Stateindex for February had the headline at a still negative -16.6 from -19.4 in January but the ISM-adjusted measure managed a stronger rebound with a rise to 47.1 from 43.4. Despite the improvements we expect the ISM-adjusted average of all measures to remain at 49 in February, steady from January and matching the three year low for this measure.

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

ECB’s Nowotny fretting over market expectations. The Austrian central bank head said central banks must watch markets but not be guided by markets and told Swiss financial website Cash that he is concerned market expectations ahead of the March 10 meeting could become as excessive as in December, when expectations had “lost touch with reality”. Nowotny added that the turbulence in global markets is mainly driven by emerging market developments, an sovereign funds aiming to ensure liquidity. He admitted that market turmoil constitutes “a massive destruction of value, which is very negative for overall sentiment”. However, Nowotny stressed that monetary policy can only improve conditions for growth and was very successful in preventing deflation and keeping credit markets intact, but that actual investments have to be made by investors.

Boston Fed dove Rosengren said the Fed would be “in no rush at all” to hike rates if US inflation does not rise and would cut rates if missing 2% growth, unemployment rising and significant weakening in U.S. labor markets was seen. That’s about par for the course from the regional Fed president. Fed’s Kashkari said that staff will continue to analyze NIRP (Negative Interest Rate Policy) as a potential policy tool, while noting that global economic and financial developments will be important inputs at the March FOMC. That said, the Fed expects a gradual increase in interest rates to be the base case. The Fed still seems quick to deny NIRP, while mulling its options for the timing of a second hike.

A third of energy companies could go bankrupt according to a report released by Deloitte, as credit risk zooms to a record high as low commodity prices cut access to cash and debt. “The roughly 175 companies at risk of bankruptcy have more than $150 billion in debt, with the slipping value of secondary stock offerings and asset sales further hindering their ability to generate cash. These companies have kicked the can down the road as long as they can and now they’re in danger of kicking the bucket, said William Snyder, head of corporate restructuring at Deloitte, in an interview. ‘It’s all about liquidity,’” noted a Reuters report.

 Main Macro Events Today

• FOMC minutes will be scrutinized for clues on Fed’s thinking last month. However, the report will be a little out of date following Yellen’s testimony last week, and given the volatility in the markets since the policy meeting. Indeed, recent events have taken a March rate hike off the table, and have pretty much pushed out the next tightening into later in the year. Nevertheless there were a couple of interesting changes in the policy statement which will make for a worthwhile read, and especially the discussions on growth, inflation, and the importance of international developments. First the Fed downgraded its growth outlook somewhat, so we’ll look to specifics on the extent of policymakers’ worries over growth. Additionally, the FOMC revealed diminished confidence that inflation would be picking up toward the 2% target over the medium term, and it will be interesting to see how widespread that angst was. Also, the Fed removed its “balance of risk” stance as it wanted to monitor global economic and financial developments for guidance.

• US Industrial Production: January industrial production is out today and should reveal a flat (median 0.3%) headline following the 0.4% decline in December and the big 0.9% drop in November. Despite some rebound in manufacturing employment, hours worked declined 0.2% in January and mining sector data continued to face headwinds from the drop in oil prices. Capacity utilization should tick down to 76.4% (median 76.6%) from 76.5% in December.

• US Produces Price Index: January PPI data is out Wednesday and is expected to reveal a 0.1% (median -0.2%) decline for the headline with the core index up 0.1% (median 0.1%) for the month. This comes on the heels of respective December figures of -0.2% for the headline and 0.2% for the core. Oil prices declined further through January which should continue to weigh on price measures.

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

Stock markets continued to move higher in Asia, but with gains moderating after yesterday’s rally. The Nikkei is up 0.2% and the Hang Seng 1.23% on the day. US and UK stock futures are also higher. Risk appetite is reviving and Draghi’s remarks yesterday that the ECB is “ready to do its part” to boost the Eurozone are helping. Elsewhere RBA minutes left the door open to further easing. Oil prices are moving higher and the front end Nymex future is trading above USD 30 per barrel. The calendar has German ZEW investor confidence, which we expect to fall into negative territory at -0.5%, down from 10.2% in January. The UK has inflation numbers, which are likely to remain benign. In Germany the ECB’s OMT program is once again under the scrutiny of Germany’s top court, who has to deliver its final verdict, after the European top court effectively backed the program.

The RBA Board decided to leave the cash rate unchanged at 2.0 per cent. In considering the stance of monetary policy, members noted that recent domestic data had, on balance, been positive and judged that there were reasonable prospects for growth to increase gradually over the forecast period while maintaining inflation close to target. Employment growth over 2015 had been stronger than earlier expected and the starting point for the forecast for the unemployment rate was around ½ percentage point lower. Inflation continued to be relatively low, with underlying measures of inflation at about 2 per cent over 2015. Growth in labour costs also remained quite subdued. Based on the available data and the forecasts for economic activity and inflation, members judged that it was appropriate to leave the cash rate unchanged at an accommodative setting. Over the period ahead, new information would enable the Board to assess whether the recent improvement in labour market conditions was continuing and whether recent financial market turbulence presaged weaker global and domestic demand.

ECB’s Deaghi said that the central bank “is ready to do its part” and will “review, and possibly reconsider the monetary policy stance in early March.” He said much will depend on the “size and persistence of the fall in oil and commodity prices and the incidence of second-round effects on wages and prices.” He argued that in light of recent financial turmoil “we will analyse the state of transmission of our monetary impulses by the financial system and in particular banks.” Draghi gave away nothing new, leaving the door firmly open to more action but taking a cautious line ahead of tomorrow’s hearing of the OMT (outright monetary transactions) program before the German Constitutional Court (which could still throw a spanner in the works). He did, however, note “increasing concerns about the prospects for the global economy” and “intensified” turbulence in financial markets.” Draghi has been speaking before a European Parliament Committee.

 Main Macro Events Today

• UK Inflation numbers are due today. The January Core consumer price index (YoY) is expected to come in at 1.3%, slightly below December figure of 1.4% while the headline inflation number (including food and energy) is expected to move up one tenth from 0.2%.

• German ZEW Economic Sentiment will be released today. We expect ZEW to fall into negative territory, thus highlighting that pessimists now outnumber optimists. We are looking for a sharp drop to -0.5% from 10.2 in January, a decline that will only add to mounting growth concerns.

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

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.

FX News Today

German retail sales unexpectedly declined 0.2% m/m in December. November was revised up to 0.4% m/m from 0.2% m/m reported initially. Official retail sales numbers are volatile and subject to frequent and sharp revisions and only cover less than 50% of consumption, so the negative number is not necessarily a sign of falling consumption. On the contrary, consumer confidence remains higher, the labour market is robust and low oil prices are freeing up real disposable income, which will keep consumption and domestic demand supported.

French prel Q4 GDP decelerated to 0.2% q/q from 0.3% q/q in the previous quarter, in line with expectations. The annual rate came in a tad higher than expected at 1.3% y/y. The French economy continues to be hampered by structural issues and survey indicators show that the Eurozone’s second largest economy will continue to underperform.

Bank of Japan unexpectedly introduces negative interest rates. The BoJ said it will apply a rate of negative 0.1% to excess reserves that financial institutions place at the central bank with effect from February 16. The BoJ will apply a three tier system to accounts with a positive, zero, or negative interest rate on each tier. The bank’s asset purchase program was left unchanged and the BoJ did not set a lower limits on yields of bonds purchased, which means even longer dated maturities may follow short rates into negative territory. The bias remains dovish. The BoJ said the Japanese economy has recovered mostly, with underlying inflation moving higher but stressed that recently “global financial markets have been volatile against the backdrop of the further decline in crude prices and uncertainty such as over future developments in emerging and commodity exporting economies, particularly the Chinese economy”. “For these reasons, there is an increasing risk that an improvement in the business confidence of Japanese firms and conversion of the deflationary mindset might be delayed and that the underlying trend in inflation might be negatively effective”.

 

Main Macro Events Today

• EU Consumer Price Index: The headline figure is out today and is expected to come in at 0.4%, a 0.2% change from the previous number.
• US GDP: The first release on Q4 GDP should reveal a 1.0% (median 0.8%) headline which would follow 2.0% in Q3 and 3.9% in Q2. We expect a $40 bln inventory subtraction coupled with a flat rate in fixed investment spending to hold down the headline. Consumption spending is expected to slow as well, although less dramatically to a 1.9% clip from 3.0% in Q3.

• US Michigan Consumer Sentiment: The second release on January Michigan Sentiment is out today and should reveal a 93.5 (median 93.1) headline following 93.3 in the first release and 92.6 in December. Other confidence measures have improved for the month with the IBD/TIPP poll ticking up to 47.3 from 47.2 and consumer confidence rising to 98.1 from 96.3. Apart from this, Michigan Sentiment displays a tendency towards upward revisions in the second release.

• US Chicago PMI: January Chicago PMI is out on Friday and is expected at 44.0 from 42.9 in December and 48.7 in November. Already released measures of January producer sentiment have weakened and the remaining releases look poised to remain depressed in January. We now expect the ISM-adjusted average of all measures to fall to a cycle-low 49 after holding at 50 since September.

 

Janne Muta

Chief Market Analyst

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