Key Forex Afternoon Notes:
- Japan leading index 105.6 vs. 105.2 previously
- Switzerland trade balance 3.43bn vs. 1.20bn
- Switzerland exports 2.9% vs. -2.9% previously; imports -2% vs. 0.7% previously
- France CPI y/y -0.4% vs. -0.3%; CPI m/m -1% as expected
- Eurozone current account 17.8bn vs. 23.3bn
- ECB meeting minutes for January monetary policy
- US weekly jobless claims 283k vs. 290k
Later
- Philly Fed manufacturing index
- Crude oil inventories
The Asian trading session saw a continuation of yesterday’s theme which was the Dollar weakness as the FOMC meeting minutes revealed that the FOMC members were not entirely confident of a rate hike but rate hike for June remains on the table. The US Dollar weakened considerably giving boost to the commodity risk currencies as the USDJPY broke down below the 119 handle.
The Aussie failed to hold on to its gains as the AUDUSD posted sharp reversal early into today’s trading session, falling from the highs above 0.7825 to trade near 0.775 handle. It was pretty much the same story with the Kiwi dollar as well, which erased yesterday’s gains to trade close to yesterday’s lows near 0.75 levels.
The USDJPY’s decline was more gradual as the pair continues to hold above 118.5 levels but looks bearish as long as the pair fails to break above 119 level again. The yen remained mixed across the board, stronger against the Greenback but was seen giving up against the British Pound.
The European trading session was light without any major economic news. French CPI declined -1% for the month but as was the trend since QE started the markets largely ignored the weaker inflation readings.
Greece continues to dominate the European markets as the clock continues to tick. The ECB announced late yesterday that it approved a request from Greece to raise the provision of the ECB’s ELA or emergency liquidity assistance to Greek banks by 5 billion. This new amount would help Greece sail through for one more week before the banks fall short of liquidity again.
Rumors continue to come out from Eurozone with the latest piece doing rounds that Greece is seeking for a 6-month extension to its facility agreement, which was quickly dismissed by Greek officials, according to reports from MNI.
Regardless of the noise, the fact remains that Greece has time until end of February as the country continues to remain adamant about not seeking the third bailout tranche with the current austerity terms attached.
The Euro which managed to turn around from the lows of 1.1335 yesterday on the dovish FOMC minutes failed to break a short term resistance level at 1.14385 as the pair continues to remain within the tight range of 1.131 and 1.14.
The British Pound, which saw a rapid rally yesterday, was looking weaker as the bullish momentum is showing signs of fading. But the pair remains well supported above the support level 1.52 in the longer term.
The ECB released its monetary policy minutes today, the first of its kind from the ECB. The minutes showed that the ECB considered various options towards launching QE (all of which the markets had carefully considered) and finally settled for its sovereign bond purchase program. The Euro was little changed on the release.
The US trading session kicked off with the weekly jobless claims which saw 283k new claims, better than estimates of 290k. The US Dollar was muted on the released ahead of the Philly Fed manufacturing index will be the next major event to watch for.
