Daily Forex Market Preview, 07/02/2018
The equity market selloff extended to the Asian and then to the European session yesterday. However, the selling was subdued towards the U.S. session close. The volatility index (VIX) however remains elevated. The U.S. dollar was little changed on the day.
On the economic front, UK’s services PMI data released yesterday showed a decline in the sector. Overall, with the UK’s manufacturing and construction sectors also coming out weaker, the data indicated that the UK’s economy got off to a subdued start in January. The Bank of England will be meeting this Thursday.
In the overnight session, New Zealand’s unemployment data showed that the unemployment rate fell to 4.5% beating estimates of an increase to 4.7%. The quarterly employment change rose 0.5% which was a slower pace compared to a 2.2% increase in the previous quarter.
Looking ahead, the RBNZ will be holding its monetary policy meeting later this evening. No changes are expected to interest rates at today’s meeting.
USDJPY 07-02-2018 Intra-day analysis
USDJPY (109.30): The USDJPY tested the support at 108.64 following the test of resistance at 110.44 – 110.34 previously. Following the rebound, USDJPY is seen forming a lower high which could indicate weakness in the currency pair. The declines could stall near the previous resistance level of 108.64. However, if price breaks down below this support further declines cannot be ruled out. To the upside, further gains are expected only on a breakout above 110.44 – 110.34 level. In the near term, USDJPY could be seen moving sideways within the range established.