On Wednesday, we saw the Japanese bulls taking charge across the board as US stocks went down due to Yellen’s dovish statement. The USD/JPY went up, setting the daily high at 115.20 after the Wall Street markets opened, but quickly reversed its path-breaking Tuesday’s low. The pair stopped at 113.96 (November 2014 low), regaining momentum and trading in the 114.10/20 area but still under a downstream pressure. It can be said that from a fundamental perspective, the yen has gained momentum because of the stocks trims in Europe and the US.
The EUR/GBP major traded 0.34% lower on Wednesday reaching 0.7775 after reversing from the 0.7790 handle, touched just before the data release. Latest figures show a weakening in UK’s industrial output, but the currency cross’s reaction to this information was only faint due to the fact that the print in seems to have happened a few minutes earlier, meaning the sharp drop mentioned before. The United Kingdom total industrial production went down 1.1% in December hitting 2012’s September low. In the meantime, the manufacturing sector also missed the expectations, showing a 0.2% drop in the monthly figures.
On Thursday, the EUR/USD lost some pips and traded around the 1.1320 handle after US labor official data turned up positive, with the jobless claims going down more than expected in the past week. The major went up in the early session reaching 1.1368 before going down over the better-than-expected US release. The jobless claims went down 16K reaching 269K in the February 6th week this year leveling to December 19th week, although the expected value was of 283K.
Yesterday, the yellow metal broke the $1,240 resistance line and reached $1,263, the highest level so far this year. In a short time, the price pushed back and settled at $1,245, far from the top of the spike but still with around $50 over Wednesday’s closing price. The rise started during the Asian session and peaked in the American session. From December’s low, the trend went up around $200, posting approximately 20% gains in a tensioned global environment, with high sell-offs in stocks and also high expectations for which regards Fed’s decision over the “normalization” pace in the monetary policy. The widespread fashion of negative interest rate (which went from Europe to Asia, stretching to Japan) could signal a future rate cut coming from United States’ Federal Reserve Bank.
