Range trading is expected since no significant data to be out today.
Economical News
USD
The biggest news on yesterday's calendar was no doubt the Consumer Price Index. The CPI measures the rate of inflation and has a very big influence on price stability and interest rates. After being widely expected to come in at 0.1%, the figure came slightly higher than expected at 0.2%. The surprise did not shake the market too much, but did in fact strengthen the USD a bit. It looked as if traders were more concentrated on other things such as the Bank of England's Minutes, the Bank of Japan's Rate Decision, and the FOMC Minutes. Despite the flow of news that came from all across the globe, the market seemed to react with a certain apathy, as most analysts expected the USD to shift off the range it has been floating in for several days now, but what we have seen is the same range, with no abnormal market price reaction.
As for today no major news event is expected from the US market except the relatively meaningless Initial Jobless Claims that is expected to release near 320K after coming in at 357K. If indeed the expectation will be fulfilled we might see a minor strengthening the greenback against all majors, although it looks as if there will be no exiting moments coming from the US markets today, and the range trading will probably continue.
EUR
The British Pound was at the center of the European focus yesterday, as the Bank of England released their minutes from their recent monetary policy meeting. The committee voted 7 against 2 to leave the rates unchanged, as most of the members of the Central bank were afraid to raise the rate at such close intervals. They thought the economy should absorb the hike before making another one.
The UK industry sector saw a big recovery yesterday, as the CBI industrial trends survey came in extremely higher than expected at 4 after previously coming in at -9.
This suggests a strong boost for the manufacturing sector in the near future.
Today's most interesting Euro-Zone news figure is the Industrial New Orders M/M which measures the value of new purchase orders placed with domestic manufacturers for durable and non-durable goods. It's expected to come a bit lower than last month's 1.4%, at 0.2%, which might cause the EUR to depreciate a bit against all majors, although no major moves are expected in this relatively light news day.
JPY
The Bank of Japan delivered the most important news yesterday, as it hiked the rate to 0.5%. On paper the hike should have caused the JPY to strengthen, but in fact a very cautious statement given later by the bank, saying that further rate hikes will be delivered gradually, and the monetary policy will be dealt with caution, weakened the currency all across the board. It appears that no significant change will occur with the JPY and traders will continue to use as a main carry trade tool.
As for today no major news is expected from Japan, and it looks like further weakening is expected for the Yen, but at a moderate pace.
Toshiko Fukui the Gov. of the BOJ will speak later today and now all the attention is pointed to his press conference when everyone will try understanding if there is going to be a change in the BOJ policy regarding the Japanese economy, or even to find out if another rate hike is expected in the near future.
Technical Analysis
EUR/USD
The pair is still trading in its tight 1.3120-1.3150 range (4H chart) and volatility has dropped significantly of late. Bollinger bands are tight, probably indicating an impending range breakout .
GBP/USD
Low volatility offers a tight range for this pair, with heavy support at 1.9458 and neutral indicators (no specific trend direction has been established yet). 4H showing us Slow Stochastic is at 50, momentum is at 99.9758 and RSI is at 50. These numbers suggest no specific trend and more likely to offer range trading.
USD/JPY
It seem that there is not much more room left for this actual bullish trend since a significant barrier is located at 121.43.
4H RSI 75 and stochastic slow intersection at 70 level implies range trading today.
USD/CHF
The 2 hour slow stochastic is at 70 and RSI is at 80 suggesting a short term bullish behavior, however lack of volatility in the daily charts keeps this pair trading in a tight range of 1.2329 to 1.2419 that is unlikely to be broken today.
Wild Card
EUR/AUD
Forex traders should notice that a very interesting pattern emerges from the daily charts since the bearish trend which was started a couple of days ago doesn't have much more room to go. Key support is at 1.6570, slow stochastic is at 10 ,and RSI at 15 implies an upcoming bullish trend.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3161 | 1.9567 | 122.28 | 1.2566 | 0.7978 | 0.6812 |
| 1.3148 | 1.9541 | 122.16 | 1.2500 | 0.7959 | 0.6777 | |
| 1.3127 | 1.9500 | 122.00 | 1.2470 | 0.7934 | 0.6751 | |
| Support | 1.3080 | 1.9457 | 120.87 | 1.2380 | 0.7850 | 0.6693 |
| 1.3040 | 1.9411 | 120.19 | 1.2329 | 0.7811 | 0.6652 | |
| 1.3002 | 1.9362 | 119.49 | 1.2300 | 0.7787 | 0.6612 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 22/02/2007 | 9:30 | EUR | Industrial New Orders seasonally adjusted (MoM) | Dec | 1.4% | 0.2% |  |
| 22/02/2007 | 13:30 | USD | Initial Jobless Claims | (Feb 17) | 2.8% | 2.5% | |