Forex Trading Library

Forex Afternoon Wrap for January 27th

0 162

Key Forex Afternoon Notes:

  • Australia NAB business confidence 2 vs. 1 previously
  • China CB leading index m/m 1.1% vs. 0.8% previously
  • UK preliminary GDP q/q 0.5% vs. 0.6%; Index of services 3m/3m 0.8% vs. 1%
  • US Core durable goods orders m/m -0.8% vs. 0.6% durable goods orders m/m -3.4% vs. 0.6%

Later:

  • US Flash services PMI
  • CB Consumer confidence
  • New Home sales
  • Richmond manufacturing index

Asian currencies were relatively mixed in today’s early trading session. The Australian Dollar managed to gain higher against the Greenback, rising as much as 0.7949 before stalling, while the Kiwi dollar was seen trading in a tight range just near 0.74 to the Greenback. The Japanese Yen was also mixed easing from yesterday’s high of 118.5, trading near 117.96.

The markets seem to have digested the Greece elections, although we expect market reaction as and when the new government settles in and talks for debt restructuring resumes. The IMF as well as Germany has categorically ruled out any haircut on the Greek bonds. With the ECB’s recently announced bond purchase program excluding Greece until June/July this year, the uncertainty is likely to pick up in the coming days.

The Euro managed to continue rallying against the Greenback since yesterday after opening the week at a new yearly low. The momentum is expected to continue in what seems like a mix of profit taking ahead of the US FOMC statement due for tomorrow. Consensus expects to see the statement unchanged from the previous month, with the most notable focus being that the Fed continues to remain on track with no rate hikes before April, while June is when the markets expect to see the first rate hike from the Federal Reserve.

UK’s fourth quarter GDP released today was disappointing, showing growth stalling at 0.5%, down from 0.7% in the third quarter. Construction and manufacturing weighed into the GDP while services sector was the sole performer in the GDP’s sub components. The GDP data however being just the preliminary reading and with past releases showing a possible room for upside (and downside) revisions, the GBPUSD initially sold off to the lows of 1.505 only to stabilize and rise higher from these levels. However, as long as the intraday high of 1.511 is not breached, we can expect to see a continued weakness in the GBPUSD.

The US session was gearing up for the durable goods orders, both of which disappointed, coming out well below estimates. The latest durable goods data posts a second straight month of decline. An interesting point of note being that Durable goods orders continued to remain weak ever since the Fed put an end to its QE3 program in October last year, subtly raising doubts about the real strength of the US economy, which partly coincides with the lingering doubts over the US rate hikes later this year.

There is more economic data to be released, including flash services PMI, consumer confidence and New home sales.

Leave A Reply

Your email address will not be published.