FX Market Movers
The Dollar weakened against most majors as the US Retail Sales figures unexpectedly dropped 0.3% in December. In addition, US Initial Jobless Claims climbed to 444K thus contributing to the negative sentiment for the greenback. It still managed to hold well against the Euro nonetheless, as investors remained wary after ECB President Trichet’s cautious outlook on the economy. Trichet stated that the central bank is in no hurry to raise interest rates and will continue its gradual withdrawal of extraordinary liquidity measures, shortly after the ECB’s decision to leave benchmark interest rates unchanged at 1%. Commodity-linked currencies edged higher against its US peer with the Aussie dollar leading the bunch, as the better-than-expected Australian Employment Change lowered the country’s Unemployment Rate to 5.5%. The Yen strengthened versus its US counterpart after the weak US economic data, driving USD/JPY to an intraday drop below the 91 level.
Commodities
Gold advanced for a second day as the Dollar weakened after the disappointing US economic reports. The yellow metal climbed from $1130 an ounce to an intraday high just above $1145 to finally settle around $1143. Silver strengthened as well, closing slightly below $18.65. Crude Oil dropped for a fourth day, settling below the $80 mark, following the weak US data and the strong gain in stockpiles reported yesterday.
The Day Ahead
During the European session the Swiss Producer and Import Prices report is due for release and the EU CPI is expected to rise 0.3% for December. In a day with consumer prices as the main attraction, US CPI is forecasted to show a 2.8% climb for last month. The Empire State Manufacturing and the Michigan Consumer Sentiment Index will also gather investors’ attention as strong outcomes could have a positive effect on the Dollar.
Technical Analysis
EUR/GBP DAILY
Bullish Scenario– Support at 0.8830 contains the bearish wave and sends the cross to a new bullish cycle.
Target A– 0.9050
Target B– 0.9150
Bearish scenario– A break below the 0.8830 level fuels the bearish momentum towards the next reliable support at 0.8700.
Target A- 0.8700
Target B– 0.8545
Daily Forex Market Analysis provided by eToro
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