Dollar Rises Broadly vs. Majors.
The U.S. Dollar firmed against most major counterparts, with the gains especially strong against the EUR, amid continued worry about Greek debt and further signs that Germany's economic recovery may be losing momentum.
Economical News
USD
The U.S. Dollar traded higher on Wednesday vs. the European currency as worries over Greece's fiscal problems increased. The U.S currency has strengthened on optimism the U.S. recovery will outpace that of other nations, increasing demand for Dollar denominated assets. The Dollar appreciated against most of its major counterparts as the outlook for Europe's economy discouraged demand for risk.
The U.S Dollar got a boost after Treasury data showed net capital inflows to U.S. assets rebounded in November. It was last up 0.6% at 91.21 yen well off an earlier 4 week low of 90.32 following news that Japan Airlines would file for bankruptcy protection from some $25 billion in debt.
The greenback also rose 0.7% against its Canadian counterpart to C$1.0325 after the Bank of Canada held rates steady and slightly lowered its growth outlook, saying a strong currency remains a risk to recovery.
EUR
Europe's single currency declined to its weakest level in 4 months against the U.S Dollar on Wednesday as markets worried about a decline in German investor sentiment and Greece's public finances. The EUR was trading below $1.43 its lowest level since Dec. 23 as the ZEW Center for European Economic Research said its index fell in January to 47.2 in its 4th consecutive drop.
The EUR also fell to its lowest level in 5 months against British Pound after Kraft Foods agreed to buy British chocolate-maker Cadbury Plc increasing demand for Pound. The single currency fell as far as 86.985 pence, its lowest since late August.
The EUR weakened vs. GBP as investors sold the common European currency on concern that Greece will struggle to contain its budget deficit.
The Pound extended gains today after a report showed U.K. inflation accelerated in December by the most since records began in 1997, fanning speculation the Bank of England will start considering when to raise Interest Rates. Analysts said that the GBP is being bought against the EUR as investors remain concerned over the region's economic recovery. The Pound is benefiting from Greece's fiscal crisis, and traders may see an acceleration of Sterling's rally in the coming days.
JPY
The Yen gained against the U.S Dollar, hitting a 4-week high after Japan Airlines filed for bankruptcy protection as expected, owing more than $25 billion. Traders said the bankruptcy of JAL may lead to Yen repatriation as the company may have to liquidate some of its dollar-buying derivative contracts or repatriate overseas assets, helping the currency.
The Japanese Yen also advanced against the EUR and Australian Dollar after the People's Bank of China guided its benchmark one-year bill yield to the highest level in 14 month as it seeks to curb record loan growth and prevent bubbles in the nation's property and stock markets. Japan's currency jumped 0.6% to 83.63 per Australian Dollar and was 0.3% higher at 129.65 per EUR, the lowest since Dec. 21.
Technical Analysis
EUR/USD
The hourly, 2 hour, 4 hour and 8 hour RSI are floating in the oversold territory while the daily and 4 hour charts' Slow Stochastic exhibiting a bullish cross. Furthermore, there is a breach of the lower Bollinger Band evident on the 4 hour, 8 hour and daily charts. Going long for the day may be a good choice.
GBP/USD
The pair seems to be exhibiting some mixed signals. While the hourly and 2 hour RSI are floating in the oversold territory and a bullish cross is evident on the hourly Slow Stochastic, the daily RSI is floating near the overbought territory and the Slow Stochastic exhibiting a bearish cross. Waiting for a clearer direction may be advised today.
USD/JPY
A bearish cross is evident on the 4 hour Slow Stochastic with the 2 hour RSI floating in the overbought territory. Going short for the day may be advised.
USD/CHF
The hourly, 2 hour and 8 hour RSI are floating in the overbought territory with a bearish cross evident on the daily and 4 hour charts' Slow Stochastic, a breach of the upper Bollinger Band is evident on the 4 hour and 8 hour charts. Going short on the day may be advised.
Wild Card
GBP/NZD
A breach of the upper Bollinger Band is evident on the 2 hour and 4 hour charts while the RSI is floating in the oversold territory on the hourly chart. Furthermore, a bearish cross is evident is evident on the 2 hour and daily charts. Forex traders are advised to go short for the day to take advantage of the impending correction.
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 | 1.4290 | 1.6410 | 92.20 | 1.0480 | 0.9565 | 0.8810 |
| 1.4255 | 1.6380 | 91.90 | 1.0450 | 0.9230 | 0.8775 | |
| 1.4225 | 1.6335 | 91.45 | 1.0420 | 0.9195 | 0.8740 | |
| Support | 1.4160 | 1.6270 | 90.80 | 1.0355 | 1.9130 | 0.8675 |
| 1.4130 | 1.6240 | 90.50 | 1.0320 | 1.9100 | 0.8640 | |
| 1.4100 | 1.6200 | 90.20 | 1.0285 | 1.9070 | 0.8600 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 2010-01-20 | 07:00 | EUR | German PPI | m/m | 0.1% | 0.2% |  |
| German PPI The Producer Price Index (PPI) is a report which measures the inflationary rate incurred by manufacturers when purchasing goods and services. It is a leading inflationary gauge for the value of goods and services being purchased by Germany's manufacturing sector. | |||||||
| 2010-01-20 | 09:30 | GBP | Claimant Count Change | -6.3K | 0.2K |  | |
| Claimant Count Change This is a measure of the number of people claiming unemployment benefits during the previous month. | |||||||
| 2010-01-20 | 09:30 | GBP | MPC Meeting Minutes | 0-0-9 | 0-0-9 | | |
| MPC Meeting Minutes The Bank of England's (BoE) Monetary Policy Committee's (MPC) Meeting Minutes are a record of the committee's interest rate meeting held about two weeks earlier. It can have a heavy impact on the market during its release as it provides hints about the state of the economy from the perspective of the central bank. | |||||||
| 2010-01-20 | 09:30 | GBP | Average Earnings Index | q/q | 1.5% | 1.6% | |
| Average Earnings Index This is a measure of the amount governments pay to wage earners, including bonuses and other compensations. | |||||||
| 2010-01-20 | 09:30 | GBP | Unemployment Rate | 7.9% | 8.0% |  | |
| Unemployment Rate This figure represents the percentage of potential workers that are currently unemployed and actively seeking a job. This report is typically overlooked as its information is derived from previously released indicators. | |||||||
| 2010-01-20 | 12:00 | CAD | Core CPI | m/m | 0.4% | 0.2% | |
| Core CPI Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate. Also Named: Bank of Canada Core CPI, CPI Ex Volatile Items | |||||||
| 2010-01-20 | 12:00 | CAD | CPI | m/m | 0.5% | 0.2% | |
| CPI The Consumer Price Index (CPI) is a measure of the change in the price of goods and services purchased by consumers. It is a gauge for inflation. | |||||||
| 2010-01-20 | 13:30 | CAD | Manufacturing Sales | m/m | 2.0% | 1.6% | |
| Manufacturing Sales Change in the total value of sales made by manufacturers. | |||||||
| 2010-01-20 | 13:30 | USD | Building Permits | 0.59M | 0.59M | | |
| Building Permits This report is a measure of impending construction activity. It is a significant indicator since the first step in beginning a new construction project is the acquisition of permits granting the approval to do so. | |||||||
| 2010-01-20 | 13:30 | USD | PPI | m/m | 1.8% | 0.1% | |
| PPI The Producer Price Index (PPI) is a measure of the inflation rate incurred by manufacturers when purchasing goods and services. | |||||||
| 2010-01-20 | 13:30 | USD | Core PPI | m/m | 0.5% | 0.1% | |
| Core PPI Derivative of the Producer Price Index (PPI) that excludes the Food and Energy items. Although Food and Energy can be very volatile from month to month, they play an important role in pass-through inflation. Therefore Core PPI usually has less impact than the overall PPI. | |||||||
| 2010-01-20 | 13:30 | USD | Housing Starts | 0.57M | 0.58M | | |
| Housing Starts This report is a measure of the number of new residential buildings which began construction during the previous month. It's a leading indicator of economic health because building construction produces a wide-reaching ripple effect. For example, jobs are created for the construction workers, subcontractors and inspectors are hired, and various construction services are purchased by the builder; | |||||||
| 2010-01-20 | 21:30 | NZD | Business NZ Manufacturing Index | 51.8 | - | | |
| Business NZ Manufacturing Index An important measure of New Zealand manufacturing industries. | |||||||
| 2010-01-20 | 21:45 | NZD | Retail Sales | m/m | 0.3% | 0.6% | |
| Retail Sales This report is a measure of the change in the total value of retail sales. Positive figures indicate economic growth. | |||||||
| 2010-01-20 | 21:45 | NZD | NZD Core Retail Sales | m/m | -0.1% | 0.4% | |
| NZD Core Retail Sales Measures the change in the total value of sales at the retail level, excluding automobiles. | |||||||
