Daily Forex Market Preview, 09/02/2018
The Bank of England’s monetary policy meeting yesterday surprised the markets with hawkish tone from the central. Officials voted to leave the interest rates unchanged at 0.50% at yesterday’s meeting by a unanimous vote. However, the statement showed that the central bank expects faster pace of rate hikes given the uptick in the global growth.
Despite the hawkish tone from the BoE, the fact that the central bank acknowledged that the UK wasn’t fully able to take advantage of the growth phase and the uncertainty from Brexit remained some key factors that offset the hawkish tone.
The equity markets resumed the selloff with the Dow Jones falling over 1000 points on the day on Thursday. Major U.S. stock indexes were down by at least 3%. The selloff extended to the Asian session with the Nikkei index down 2.7% while the Shanghai Index was seen losing 4.11% at the time of writing.
Earlier today, China’s inflation data confirmed that consumer prices rose at a slower pace of 1.5% as expected. This is a weaker print compared to December’s inflation rate of 1.8%. Producer prices were also weaker, rising just 4.3% missing estimates and slower than December’s increase of 4.9%.
Looking ahead, the economic calendar will see Canada’s unemployment details. Unemployment rate is expected to edge slightly higher to 5.8% while the economy is forecast to add 10.3k jobs during January.
EURUSD 09-02-2018 Intra-day analysis
EURUSD (1.2254): The EURUSD extended declines as prices touched a fresh monthly low at 1.2211 before pulling back slightly. The daily session in the EURUSD ended with a spinning bottom candlestick pattern that could suggest a near term recovery in the declines. On the 4-hour time frame, EURUSD is seen consolidating near 1.2237 retesting the January 23 lows. We expect to see a pullback in prices that could see EURUSD retesting the broken support level at 1.2363 – 1.2333. If resistance is established here, then EURUSD could extend declines down to 1.2090 – 1.2070 level in the medium term. The bias shifts if price manages to breakout above 1.2363, resistance high.