Daily Forex Market Preview, 31/01/2018
The common currency posted strong intraday gains on the back of better than expected GDP data but the euro closed weaker by Tuesday’s close.
The preliminary GDP data from the Eurozone released yesterday showed that the economy expanded 0.6% on the quarter ending December 2017. This was in line with the general expectations and it pushed the annual GDP to 2.7%. It was the fastest pace of annual GDP expansion since 2007. Germany and France GDP numbers were also released which managed to push the Eurozone economy higher and offset a weaker pace of GDP expansion from Spain.
Elsewhere, the BoE Governor Carney was quizzed by lawmakers. In his testimony, Carney brushed aside speculation of being overly biased towards Brexit and noted that inflation could remain at the current levels due to the depreciation in the exchange rate.
Looking ahead, a major event risk for the euro comes from the flash inflation estimates for the month of January. Economists forecast that consumer prices might have slowed even further at a pace of 1.3% on an annual basis. Core inflation is however expected to rise 1.0%, up from 0.9% in December. The ADP payrolls report will be coming up with forecasts showing a 191k gains in the private sector. This will be followed up later in the evening by the FOMC meeting. Fed officials are expected to keep rates steady.
NZDUSD intra-day analysis
NZDUSD (0.7376): The New Zealand dollar has stayed flat with prices consolidating near the 0.733 level. This potentially suggests that the upside could be exhausted. A major event catalyst could validate a downside move. This could come from today’s FOMC meeting. Support for NZDUSD is seen at the technical level of 0.7160 that could be tested in the event that the kiwi dollar slips lower. Below 0.7160, another support level at 0.6943 could be in focus. Alternately, in the event that NZDUSD manages to bounce off the current levels, the currency pair will need to advance above January 24 highs at 0.7407 to maintain further gains.