The headline UK retail sales data was weaker than expected with a 1.5% decline for January compared with a 0.9% expected fall, but this followed the extremely strong reading for December and a substantial reversal was inevitable for the month. GBP/USD retreated to the 1.6610 area immediately following the release, but found strong buying support at lower levels and quickly moved back above 1.6650. Read the rest of this entry »
Forex Day Trading Blog
Minutes from January’s Federal Reserve policy meeting indicated that several Fed officials were looking to drive home the idea that further tapering of bond purchases would take place in a predictable manner over the rest of 2014. Some members did take a more cautious tone which was broadly predictable given the diversity of opinion within the committee and economic conditions will be watched very closely. There were potentially significant comments suggesting that financial stability should appear more explicitly in the list of factors which would guide decisions about the Fed funds rate. Read the rest of this entry »
After pushing higher during the New York session on Tuesday, EUR/USD maintained a generally firm tone in Asia on Wednesday with only a very limited correction lower.
The Nikkei equity index drifted lower on the session and there was a slightly more cautious tone towards risk appetite which helped underpin the yen and USD/JPY drifted back towards the 102 level. The Chinese HSBC flash PMI reading will be important for underlying market risk conditions on Thursday and will have an important impact on the Australian dollar. Read the rest of this entry »
The dollar has again struggled over the past 24 hours, unable to secure any sustained respite. As expected, the Bank of Japan held the amount of quantitative easing steady at the latest policy meeting on Tuesday. The bank did, however, expand a policy of providing cheap financing to the corporate sector with the amount doubled to JPY7trn from JPY3.5trn. The move put immediate downward pressure on the yen and selling was compounded by a sharp rise in the Nikkei index which increased by close to 3%. USD/JPY rallied to a peak around 102.70 as the Euro moved above the 140 level. Read the rest of this entry »
The latest Japanese GDP data was weaker than expected with a 0.3% fourth-quarter increase compared with a 0.7% forecast. The subdued data will increase pressure for further monetary action by the Bank of Japan and there were reports that the central bank would not issue a 2015 monetary-base forecast to give more policy flexibility which could also increase yen volatility. A more cautious tone towards risk, however, initially underpinned the yen as USD/JPY tested support below 101.50 before rebounding back towards 102.00 later in the European session.
The latest CFTC data recorded a small decline in long speculative dollar positions, but there was still a substantial long position and a net short Euro position which will limit the potential for a dollar recovery. EUR/USD continued to probe resistance above 1.37 on Monday with a peak just below 1.3725 before being subjected to profit taking.
As expected, Renzi was handed the presidential mandate to attempt to form a new Italian government following Prime Minister Letta’s resignation on Friday. The immediate market impact was very limited with no evidence of stresses in Italian bonds as sentiment was supported by Moody’s return of Italy’s credit rating to stable from negative.
Markets struggled to gain any momentum during the bulk of Monday with no significant economic releases on the calendar with activity also dampened by a US market holiday. EUR/USD maintained a tone of consolidation, backing away from levels above 1.3710 but, equally, bears were unable to generate any significant selling on the downside with immediate support just below 1.37 as USD/CHF looked to hold just above the 0.89 level.
Sterling had again been the stand-out performer on Friday and GBP/USD surged higher again in Asia with a peak above 1.68 and the highest level since the third quarter of 2009. Sterling was increasingly overbought following last week’s surge and was finally subjected to a sharp correction with a retreat back to 1.6720. EUR/GBP also found support below the 0.8160 level and moved abck to the 0.82 level.