Strong European Data Support The Euro.
Economical News
USD
Yesterday, the USD weakened against most of the majors except for the GBP. The underperformance of the American currency was inspired by negative domestic data and international one. The American trade deficit in December again widened, this time to $61.2Bln , higher than the previous month's $58.1Bln. The reading above -60 related to the increasing oil prices which pressured import prices.
Today, traders should pay attention to the January Retail Sales, expected for release at 13:30 GMT. The forecast suggests a 0.4% increase compared with 0.9% in the previous month. Any reading softer then 0.3% might pressure the USD even more.
Later today, the Fed chairman Bernanke will give his testimony to the Senate regarding the US monetary policy. We think it is probable that we will hear a hawkish tone by Bernanke in order to support the USD and to backup his FOMC colleagues.
EUR
Yesterday, positive figures were released in the Euro-zone, including the Gross Domestic Production (GDP) of Germany, France, and Italy were stronger than expected. In addition, Industrial Production surged to 4% versus 2.5% last month, and finally the ZEW index also rose sharply from -1.8 to 6.8. We can now understand the recent bullish trend developing in the EUR crosses as it seems that EU economic growth is accelerating. Today, there are no significant data expected from the Euro-zone.
In the UK, the GBP fell sharply yesterday after softer than expected CPI sending the GBP/USD to lows of 1.9400. The market anticipated a 2.9% rise in January while the numbers came out at only 2.7%.
Today, data regarding the employment sector is due and also the BoE quarterly inflation report.
JPY
Japan's December unadjusted Current Account Surplus saw a shock drop of -5.0% YoY, an 11.1% shortfall of the forecast of 2,000bn JPY. However, it is worth noting that this was the first decline in 6 months and was caused by the dividends paid to overseas investors because of robust profit growth.
Traders are focused more on October-December Gross Domestic Product (GDP) data, due out 23:50 GMT Wednesday, to gauge the possibility of an interest rate hike by the Bank of Japan next week.
Technical Analysis
EUR/USD
The pair reached the critical resistance at 1.3060, and then it dropped . However, in the recent session the pair broke this resistance and is now aiming towards the next resistance at 1.31. Failure will signal a retrace back to the trading band of the last five consecutive weeks.
GBP/USD
Another small "doji star" yesterday should lead to a rally back up to 1.9600. However, in the last few days we are witnessing a bearish tunnel with lows of 1.94 with next support at 1.9380.
USD/JPY
The pair has been bearish over the last two days and a break below 121.00, which is possible later today, targets 120.00. MACD is signaling for further losses together with the intraday momentum indicators.
USD/CHF
The pair dropped from the critical resistance at 1.2530s until 1.2440s support level, the expected move could be towards the downside, and that depends on passing 1.2440s support level.
Wild Card
AUD/JPY
This forex pair is trading just around the 94.80 resistance point. A breach above this level will signal further appreciation towards the 95.50 levels which is a 10 years high. Daily RSI is coming into overbought levels with room to expend. Retracement will occur with a failure around 95.00 back towards the 93.20 levels.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
|
 |
|
|
|
| Weekly Trend | |
 |
|
|
|
|
| Resistance | 1.3161 | 1.9647 | 121.97 | 1.2610 | 0.7878 | 0.6792 |
| 1.3135 | 1.9585 | 121.74 | 1.2585 | 0.7821 | 0.6742 | |
| 1.3110 | 1.9540 | 121.46 | 1.2535 | 0.7777 | 0.6730 | |
| Support | 1.2976 | 1.9413 | 120.97 | 1.2450 | 0.7711 | 0.6688 |
| 1.2921 | 1.9380 | 120.76 | 1.2411 | 0.7694 | 0.6641 | |
| 1.2884 | 1.9344 | 120.40 | 1.2375 | 0.7655 | 0.6600 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 14/02/07 | 09:30 | GBP | Claimant Count Rate | JAN | 3.0% | 3.0% |  |
| 14/02/07 | 09:30 | GBP | Jobless Claims Change | JAN | -5.5K | -5.0K | |
| 14/02/07 | 09:30 | GBP | Average Earnings inc bonus (3MoY) | DEC | 4.1% | 4.1% |  |
| 14/02/07 | 09:30 | GBP | Average Earnings ex bonus (3MoY) | DEC | 3.7% | 3.7% | |
| 14/02/07 | 10:30 | GBP | Bank of England Quarterly Inflation Report | DEC | N/A | N/A | |
| 14/02/07 | 13:30 | USD | Core Retail Sales | JAN | 1.0% | 0.1% | |
| 14/02/07 | 13:30 | USD | Retail Sales Less Autos | JAN | 1.0% | 0.3% | |
| 14/02/07 | 15:00 | USD | Fed's Bernanke Testifies Before Senate on Monetary Policy | | |||
| 14/02/07 | 23:50 | JPY | Gross Domestic Product (QoQ) | (4Q P) | 0.2% | 0.9% | |
| 14/02/07 | 23:50 | JPY | Gross Domestic Product Annualized | (4Q P) | 0.8% | 3.8% | |
| 14/02/07 | 23:50 | JPY | Gross Domestic Product Deflator (YoY) | (4Q P) | -0.7% | -0.5% | |