As expected, Yellen didn’t surprise anyone on Wednesday. It turned out to be a very quiet day, especially in the Forex market. The volatility was below the 10 days average, even though US New Home Sales were released above expectations. EURUSD, like other currency pairs traded sideways.
Yesterday was a totally different day. Volatility started to rise on the Japanese trading session. Before LSE opening GBPJPY and GBPUSD have been already at half of the 10 days average.
Yesterday’s economic releases:
- German Unemployment Change was -20K;
- UK GDP second release was in line with estimates, 0.5%;
- Eurozone M3 Money Supply January was +4.1%;
- Eurozone Economic Sentiment 102.1;
- Italian wages jumped in January;
- Italian retail sales dropped in December by 0.2%;
- Italian business confidence in February got up to 99.1;
- Canadian CPI and Core CPI were released -0.2% and 0.2%;
- US CPI was -0.7% and it was expected to drop 0.6%;
- US Core CPI expected to increase by 0.1%, but actually it increased by 0.2%;
- US Unemployment Claims were expected to be 288K, actual value 313K;
- US Core Durable Goods increased by only 0.3%;
- US Jan real weekly wages increased by 1.2% vs. 0.3% expected.
The economic releases were mostly above estimates and the Dollar was pretty vulnerable in the first part of the day. But with Bullard’s declarations, it started winning against its major counterparts. Bullard said that dollar’s effect on the economy is marginal and that ECBs QE is likely to weaken the euro further. EURUSD dropped more than 65 pips in less than 3 hours. It seems to be heading towards 1.1300 or even lower to the next important support at 1.1265.
The real move started when US Jan real weekly wages were released. The greenback had one of the best days of the year. EURUSD broke under 1.1250, GBPUSD hit 1.5400, USDJPY aimed for 119.50 and AUDUSD dropped under 0.7800.
The price of Gold was rejected from $1200 and is now trading around $1216 per ounce. The medium term trend is still down, but we can expect a continuation of the up move on the New York trading session. Brent Oil bounced from $58 per barrel, but couldn’t break $62.45 per barrel and dropped back to $60 per barrel. OIL WTI is trading below $50 per barrel.
Today the list of economic indicators is pretty long, but the most important will be German Prelim CPI and US Prelim GDP. German CPI has no hour set, for the moment and it is expected to increase by 0.6%, while US Prelim GDP is expected to be released at 13:30 GMT and a value of 2.1%.
