Forex Trading Library

Forex Afternoon Wrap for 19th January

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Key Forex Afternoon Notes:

  • Japan Industrial production m/m -0.5% vs. -0.6% previously; -3.7% vs. -3.8% y/y
  • Switzerland PPI m/m -0.4% vs. -0.8%; PPI y/y -2.1% vs. -2.4%
  • Eurozone current account 18.1bn

The markets opened today on a quiet note without any major economic data on the tap. The currency markets were largely trading off last week’s SNB shock with most of the risk currencies, the Aussie and Kiwi trading in a tight choppy range. The Japanese Yen fell from Friday’s high of 117.61 and was seen currently trading near 117 levels.

The Greenback, which weakened considerably on account of the Swiss National Bank removing the floor against the Euro was seen to be slowly recovering its losses from last week. However, the buck looks threatened to the upside unless we see a break above 93.07, the highest close last week. With the US markets closed today on account of Martin Luther King holiday, the Dollar Index is most likely to trade within a range.

The European session was also quiet. Swiss PPI was the only major news release today, which showed that producer price inflation managed to improve but continue to post negative numbers. The Euro managed to stabilize from last week’s lows of 1.1459 and is currently trading above 1.15 handle ahead of an important week.

The British Pound has been quite choppy although marked by volatility as the daily highs and lows continue to expand. The Cable however remains supported trading above the daily pivot level.

Gold futures were seen trading weaker today before the precious metal opened higher over the weekend at 1281.50. However, we could expect to see a minor corrective decline, back towards the 1250 – 1230 levels before the short term uptrend resumes its rally.

Oil futures were also weaker today after posting gains last week. WTI Crude Oil managed to close last week at 48.85 after hitting a multi-year low at 44.76 levels. A break above Friday’s close, which is 48.85 could potentially set the stage for Crude oil futures to move to the upside for a possible correction towards the $50 psychological level.

The current subdued trading price action would however pick up steam from tomorrow onwards with the main focus being China’s GDP. While estimates are currently positioned to see a small decline from 7.3% previously to 7.2%, there is a building consensus that the GDP might miss estimates by a broader note, particularly highlighted by the falling Copper prices. Should the GDP miss estimates, we could see a broad reactionary sell off in the Aussie and Kiwi dollars for the day ahead of other important events which include the Eurozone and German ZEW economic sentiment followed by New Zealand GDP figures due to be published later tomorrow.  Besides China GDP figures, the markets are also likely to position themselves ahead of the Bank of Japan policy meeting, where it is expected to downgrade their inflation expectations and forecasts, while the ECB meeting on Thursday will likely take center stage.

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