By GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
The dollar rallied throughout the Asia session, in the wake of yesterday’s solid ISM report. Gains were most pronounced against the AUD, NZD, JPY, and CHF. EURUSD traded 1.3329-1.3389, USDJPY 80.93-82.18. Equities have had a good start to the new year – the S&P 500 finished up over 1%, and the Nikkei 225 is +1.6% higher at the time of writing, while the US 10y yield is relatively unchanged at 3.37%. The manufacturing ISM index for December rose as expected to 57.0 and the new orders index, the most leading component, also advanced. Details of the report showed a gain in the production component and while the employment index slipped, the reading still indicates net headcount gains. Our team of analysts note that the increase in the headline reading leaves the index at a very healthy level and suggests upward momentum at the end of Q4, which is consistent with their forecast of real GDP growth picking up from a +2.6% pace in Q3 to +3.5% in Q4. Construction spending also rose for November, though less than October. Up next are the minutes from the Dec. 14 FOMC meeting, which could shed more light into how officials view the effectiveness of QE2 in the context of the November payrolls disappointment and higher Treasury yields.
EUR
In a piece in Spanish paper El Pais, China’s vice-Premier Li Keqian said China will continue to buy Spanish government debt in the future. The comments come ahead of his week-long visit to Spain, Germany and the UK, where the EU’s sovereign crisis and potential Chinese help is expected to be high on the agenda.
German manufacturing PMI was softer than expected at 60.7, however the factory jobs index came in at 57.1, the highest in the survey’s 14-year history.
The ECB announced it completed ?164mm of bond purchases under the Securities Markets Program (SMP) in the week to December 31, compared to ?1.121bn the week before. This brings the total purchases under the SMP to ?73.5bn
TECHNICAL OUTLOOK
USDCAD 0.9889/25 support zone.
EURUSD BULLISH Momentum is positive; break of 1.3425 would expose1.3499. Support at 1.3251.
USDJPY BEARISH The outlook remains bearish; focus is on 80.93 ahead of 80.54. Resistance is at 84.51.
GBPUSD BEARISH Support zone 1.5297/65 holds while initial resistance at 1.5665.
USDCHF BEARISH Bearish outlook remains; focus is on 0.9301 ahead of 0.9202; initial resistance is at 0.9734.
AUDUSD BULLISH Bull trend is intact; focus is on 1.0256 resistance while support lies at 0.9951/18.
USDCAD BEARISH Bearish outlook; targets 0.9889/25 support zone. Initial resistance is at 1.0008.
EURCHF BEARISH Outlook remains bearish; break of 1.2402 would expose 1.2283; resistance at 1.2714.
EURGBP BULLISH Upside momentum with focus on 0.8692, a break here exposes 0.8777. Support at 0.8503.
EURJPY BEARISH Support holds at 107.61, break here would expose 105.80. Resistance at 110.82.
Forex Daily Market Commentary provided by GCI Financial Ltd.
GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.
DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
