Forex Trading Library

Forex Afternoon Wrap for February 16th

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Key Forex Afternoon Notes:

  • UK Rightmove HPI m/m 2.1%
  • Japan Prelim GDP q/q 0.6% vs. 0.9%
  • Japan Prelim GDP price index y/y 2.3% vs. 1.9%
  • Australia new motor vehicle sales m/m -1.5%
  • Japan revised industrial production m/m 0.8% vs. 1%
  • Eurozone trade balance 23.3bn vs. 21.3bn

The week started off with data from Japan. Preliminary GDP for the 4th quarter, annualized grew 2.2% while on the quarter, managed to rise 0.6%, but below estimates of 0.9%. The previous data was revised from -0.4% to -0.5%. The latest quarterly GDP data does provide some relief as the Japanese economy managed to stave off a technical recession from the previous quarter. The GDP price index, which measures the change in prices of all goods and services included in the GDP managed to rise 2.3%, beating estimates of 1.9%, in what looks to be an early signal of a shift in inflation to the upside.

The Yen hit an early session low to 118.4 to bounce off the major support. USDJPY was seen trading near 118.6 at the time of writing. The Aussie and Kiwi dollars were also seen trading higher against a broadly weaker Greenback. The main risk to the Aussie comes from tomorrow’s RBA meeting minutes. Over the weekend, economic data from New Zealand saw retail sales rise 1.7% for the quarter, beating estimates of 1.3%, while core retail sales managed to also rise 1.5%, above estimates of 1.1%.

After closing last week on a bearish note, the US Dollar index opened weak today as the US trading session is closed on account of a bank  holiday. Most of the currency pairs were seen trading off Friday’s theme which saw a weaker Greenback due to the fundamentals.

The European trading session had little to no news and thus shifting the market focus onto the Eurogroup meetings, or specifically the Greece talks. The Euro was seen to be under pressure early on as the pair failed to hold on to its session highs near 1.142, but remains broadly well supported, trading above the 1.14 handle.

The British Sterling, which saw a stellar rally last week across the board, opened today on a weaker note, falling against most of its peers including the Greenback, the Yen, the Canadian dollar as well as the Australia dollar, while there weren’t any fundamentals affecting the intraday declines. However, the Sterling continues to remain strong in the medium term and we suspect the current declines to be a temporary correction before the medium term bullish trend is revived again.

Crude oil futures also continued their quiet rally as the commodity was last seen trading near the $53 handle after bouncing off from last week’s low at $49.7. Crude oil could possibly stall near 53.7 and 54.3 which is a major support/resistance level.

Gold futures also managed to continue to trade in the green, trading at $1234 to an ounce at the time of writing.

The US and Canadian markets are closed today on account of a bank holiday and we expect the volatility to decline in the coming hours but the main themes likely to continue into tomorrow.

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