Market Movers of the Day
Asia-Pacific
*New Zealand Trade Deficit narrowed more than forecasted to -269M
Europe
*German PMI Services worse than forecasted at 52.7
*UK Nationwide Consumer Confidence worse than predicted at 69
*UK PMI Services worse than expected at 56.8
*EU PMI Composite in line with market expectations at 54.2
*EU Industrial Orders worse than expected at -2.2% MoM
*EU PPI lower than forecasted at 0.1% MoM
Americas
*US ISM Non-Manufacturing worse than estimated at 50.1
*US ADP Employment Change worse than expected at -84K
*US EIA Crude Oil Stocks climbed 1.3M
*US FOMC Minutes
The Overall Sentiment
Equities
US stock markets barely managed to close on the positive side, led by gains from raw-materials producers as commodities continued to rally, after some oscillations caused by economic data releases that failed to meet expectations. The S&P added 0.1% and the Dow ended rather flat, advancing less than 0.1%. Minutes of the FOMC meeting in December showed difference of opinion between Fed policy-makers on the schedule for withdrawing the emergency stimulus program. Some officials stated that unwinding stimulus might hurt the recovery in the housing sector and expressed concerns about the economy being capable to sustain improvement once the support is removed. In Europe, the main indices oscillated throughout the day, closing little changed with a gain of less than 0.1%.
Forex
The Dollar weakened against most majors, gaining only against the Yen, as risk appetite set the tone in the Forex arena. EUR/USD climbed to 1.4435 intraday but still remained within range. The pound advanced modestly against the greenback, ending around 1.6020, after a volatile session ahead of the BOE’s rate decision. Commodity-linked currencies continued to shine as energy and metal extended gains. The Aussie dollar rose above 0.92 against its US peer and traded slightly beyond 85 versus the Yen, aiming to reach its highest levels in 15 months. The Canadian dollar strengthened against its US counterpart for a fifth day, almost touching the 1.03 level. The Yen weakened across the board as Japan’s Finance Minister Fujii resigned from office due to health problems, adding to the uncertainty and worries surrounding the direction of the Japanese economy. Naoto Kan was appointed as the new Finance Minister, with the duty of avoiding a double-dip recession, as deflation continues to loom over the economic health of the Land of the Rising sun.
Commodities
Crude Oil extended its advance in spite of a 1.3 million-barrel gain in stockpiles, almost touching $83.50 intraday, to close around $83.20. Gold continued to rally for a sixth day as the Dollar weakened, topping slightly above $1140. Silver rose as well, ending around $18.15.
The Day Ahead
The day will start with the Australian Retail Sales and Trade Balance, with expected positive figures that could fuel a further strengthening of the Aussie dollar. In the European session, EU Consumer Confidence is likely to continue in the road of improvement, whereas EU Retail Sales are expected to show no change from the previous month. The Bank of England’s rate decision will be the center of attention, with benchmark interest at 0.50% forecasted to remain unchanged, while no amends are predicted for the BoE’s Quantitative Easing program, at least until the next meeting in February. During the US session, Initial Jobless Claims are expected to rise to 440K, and the Canadian Ivey PMI is predicted to decrease to 52 from a previous 55.9.
Technical Analysis
GOLD DAILY
Bullish Scenario– A daily closing above 1140 will confirm the bullish sentiment driving the yellow metal to higher levels.
Target A– 1168
Target B– 1195
Bearish scenario– Resistance at 1140 holds sending Gold down for a correction.
Target A- 1110
Target B– 1072
Daily Forex Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
