The economic data during the European trading session was relatively quiet yesterday.
The NY trading session saw the release of Canada’s retail sales report. Core retail sales fell 0.6% on the month which was worse than forecasts of a 0.4% decline. Headline retail sales in Canada fell 0.9%, coming out worse than the forecasts of a 0.6% decline. There were also downside revisions to the previous month’s data.
The housing price index report from the U.S. showed a 0.4% increase, which was higher than the estimated 0.3% increase. The Richmond Fed manufacturing index scored at -2 as forecasted.
Australia’s employment data for December was released earlier today. Data showed that the unemployment rate fell to 5.0% beating estimates of an unchanged print of 5.1%. The economy added 21.6k jobs during the month.
The European session today will focus on the flash manufacturing and services PMI report. The report will cover France and Germany and also include the flash estimates for the Eurozone. Both the manufacturing and services sectors should see a modest increase in activity compared to December.
The main highlight of the day will be the ECB’s monetary policy meeting. No changes are expected from the ECB, but Draghi is likely to come out with a dovish statement amid slowing growth and falling inflation.
The NY trading session will see the weekly unemployment claims coming out followed by Markit’s flash manufacturing and services PMI data.
EURUSD Intraday Analysis
EURUSD (1.1384): The EURUSD currency pair extended gains on the day as price action broke out to the upside. The resistance level at 1.1397 is likely to hold the gains in the near term, keeping euro currency trading subdued. However, an upside breakout above this resistance level could no doubt push the euro higher to test the next resistance level at 1.1461. This is likely to happen if support hits 1.1397 on a retest. To the downside, the Euro currency should most likely test the lower support at 1.1334.
AUDUSD Intraday Analysis
AUDUSD (0.7109): The AUDUSD currency pair extended declines on the day with price action settling into a corrective decline. This comes with the resistance at 0.7191 holding the gains. The downside could see the AUDUSD eventually slipping to test the support at 0.7022. This level previously acted as resistance and following the breakout, price action is yet to test this level of support.
XAUUSD Intraday Analysis
XAUUSD (1281.51): Gold prices have settled into a range with the 1280 handle holding out as support. The modest bounce off this level has kept gold prices trading flat. The risk is balanced as gold could potentially test the resistance level at 1290.77 which would mark the retest of the downside breakout from the triangle pattern. Alternately, if the 1280 support gives way, gold prices could eventually open the downside toward the 1250 level of support.
