Arnaud Masset
Swissquote Bank Ltd
Forex News and Events
SARB decision in focus (by Arnaud Masset)
Later today, the South African central bank is expected to hike interest rate by 50bps to 6.75% as the deanchoring of inflation expectations together with renewed pressure on the rand have left little choice to the SARB. CPI inflation rose to 5.20% in December from 4.80% in the previous month. Looking beyond, Governor Kganyago will find itself in a similar situation to Governor Tombini where he will have to choose between trying to anchor inflation expectations, at the risk of accelerating the recession, and supporting the economy by staying sidelined.
On the currency side, we think the rand weakness will likely persist in 2016 in spite of the SARB’s efforts to curb inflation. The main reason is that the central bank will have no choice at some point, just like the BCB, and will have to give up on containing inflation in order to let the economy breathe. This morning, USD/ZAR is trading around 16.3125, down 0.80%, ahead of the SARB decision.
New Zealand: back to policy divergence (by Yann Quelenn)
As expected by the market, the Reserve Bank of New Zealand has kept its Official Cash Rate unchanged at 2.50%. This follows the rate cut of 25 basis points at last December’s meeting. The central bank is in a dovish mood and hinted that the door is wide open for further easing.
The current low inflation is weighing on the RBNZ monetary policy, which printed for the fourth quarter 2015 well below forecasts (0.1% y/y vs 0.4 y/y). The central bank remains confident for 2016 as inflation is expected to increase. Yet, core inflation (excluding food and energy) is in line with the target.
Therefore, global turmoil is also largely affecting the New Zealand economy, especially China's slowdown. Boosting exports for New Zealand is a key goal and we should see continued weakness in the Kiwi despite policymakers being optimistic regarding the domestic economy and growth in tourism and construction (amongst others).
The next rate decision is due March 10th. In the meanwhile we assume that the central bank will be gathering more data in order to remove the dovish stance towards further easing. It is obvious that inflation will be the key driver for another rate cut in 2016. Over the medium term we remain bullish on the USDNZD and target 1.6000.
Gold - Bullish Momentum Keeps Growing.
| Today's Key Issues | Country/GMT |
| Dec Unemployment Rate SA, exp 3,70%, last 3,70% | DKK/08:00 |
| Dec Unemployment Rate Gross Rate, exp 4,50%, last 4,50% | DKK/08:00 |
| Jan CPI Saxony MoM, last 0,00% | EUR/08:00 |
| Jan CPI Saxony YoY, last 0,20% | EUR/08:00 |
| Dec Retail Sales YoY, last 4,20% | EUR/08:00 |
| Dec Retail Sales SA YoY, exp 3,00%, last 3,30% | EUR/08:00 |
| 4Q Unemployment Rate, exp 21,20%, last 21,18% | EUR/08:00 |
| Bloomberg Jan. Russia Economic Survey (Table) | RUB/08:00 |
| Dec Unemployment Rate, exp 6,40%, last 6,20% | SEK/08:30 |
| Dec Unemployment Rate Trend, last 7,00% | SEK/08:30 |
| Dec Unemployment Rate SA, exp 6,90%, last 6,80% | SEK/08:30 |
| Dec Trade Balance, exp 0.0b, last -5.2b | SEK/08:30 |
| Dec Retail Sales MoM, exp 0,00%, last 0,40% | SEK/08:30 |
| Dec Retail Sales NSA YoY, exp 4,60%, last 5,20% | SEK/08:30 |
| Bloomberg Jan. Turkey Economic Survey | TRY/08:30 |
| 4Q Industrial Confidence, exp -6, last -8 | NOK/09:00 |
| Jan CPI Brandenburg MoM, last 0,00% | EUR/09:00 |
| Jan CPI Brandenburg YoY, last -0,10% | EUR/09:00 |
| Jan CPI Hesse MoM, last -0,10% | EUR/09:00 |
| Jan CPI Hesse YoY, last 0,30% | EUR/09:00 |
| Jan CPI Bavaria MoM, last -0,10% | EUR/09:00 |
| Jan CPI Bavaria YoY, last 0,50% | EUR/09:00 |
| Dec Foreign Tourist Arrivals YoY, last -0,50% | TRY/09:00 |
| Dec Hourly Wages YoY, last 1,30% | EUR/09:00 |
| Dec Hourly Wages MoM, last 0,20% | EUR/09:00 |
| Jan CPI North Rhine Westphalia MoM, last -0,10% | EUR/09:30 |
| Jan CPI North Rhine Westphalia YoY, last 0,40% | EUR/09:30 |
| Dec PPI YoY, exp 4,90%, last 4,30% | ZAR/09:30 |
| Dec PPI MoM, exp 0,30%, last 0,10% | ZAR/09:30 |
| 4Q A GDP QoQ, exp 0,50%, last 0,40% | GBP/09:30 |
| 4Q A GDP YoY, exp 1,90%, last 2,10% | GBP/09:30 |
| Nov Index of Services MoM, exp 0,20%, last 0,10% | GBP/09:30 |
| Nov Index of Services 3M/3M, exp 0,60%, last 0,50% | GBP/09:30 |
| Jan Economic Confidence, exp 106,4, last 106,8 | EUR/10:00 |
| Jan Business Climate Indicator, exp 0,4, last 0,41 | EUR/10:00 |
| Jan Industrial Confidence, exp -2,5, last -2 | EUR/10:00 |
| Jan Services Confidence, exp 12,9, last 13,1 | EUR/10:00 |
| Jan F Consumer Confidence, exp -6,3, last -6,3 | EUR/10:00 |
| Jan FGV Inflation IGPM MoM, exp 0,99%, last 0,49% | BRL/10:00 |
| Jan FGV Inflation IGPM YoY, exp 10,81%, last 10,54% | BRL/10:00 |
| COPOM Monetary Policy Meeting Minutes | BRL/10:30 |
| Brazil's Central Bank Publishes Minutes From January Meeting | BRL/10:30 |
| Dec Unemployment Rate, exp 7,30%, last 7,50% | BRL/11:00 |
| Jan CBI Reported Sales, exp 18, last 19 | GBP/11:00 |
| janv..28 SARB Announce Interest Rate, exp 6,75%, last 6,25% | ZAR/12:00 |
| Dec Central Govt Budget Balance, exp -60.0b, last -21.3b | BRL/12:30 |
| Bank of Portugal's Costa Speaks in Madrid | EUR/13:00 |
| Jan P CPI MoM, exp -0,80%, last -0,10% | EUR/13:00 |
| Jan P CPI YoY, exp 0,40%, last 0,30% | EUR/13:00 |
| Jan P CPI EU Harmonized MoM, exp -1,00%, last 0,00% | EUR/13:00 |
| Jan P CPI EU Harmonized YoY, exp 0,40%, last 0,20% | EUR/13:00 |
| janv..22 Gold and Forex Reserve, last 368.3b | RUB/13:00 |
| Bank of Portugal Governor Speaks in Madrid | EUR/13:00 |
| janv..23 Initial Jobless Claims, exp 281k, last 293k | USD/13:30 |
| janv..16 Continuing Claims, exp 2218k, last 2208k | USD/13:30 |
| Dec P Durable Goods Orders, exp -0,70%, last 0,00% | USD/13:30 |
| Dec P Durables Ex Transportation, exp -0,10%, last 0,00% | USD/13:30 |
| Dec P Cap Goods Orders Nondef Ex Air, exp -0,20%, last -0,30% | USD/13:30 |
| Dec P Cap Goods Ship Nondef Ex Air, exp 0,80%, last -0,60% | USD/13:30 |
| ECB SSM Board Member Coene Speaks in Brussels | EUR/14:30 |
| janv..24 Bloomberg Consumer Comfort, last 44 | USD/14:45 |
| Dec Pending Home Sales MoM, exp 0,90%, last -0,90% | USD/15:00 |
| Dec Pending Home Sales NSA YoY, exp 4,80%, last 5,10% | USD/15:00 |
| Jan Kansas City Fed Manf. Activity, exp -10, last -9 | USD/16:00 |
| ECB Governing Council Member Jens Weidmann Speaks in Bonn | EUR/18:00 |
| Feb Business Survey Manufacturing, last 68 | KRW/21:00 |
| Feb Business Survey Non-Manufacturing, last 69 | KRW/21:00 |
| Dec Building Permits MoM, last 1,80% | NZD/21:45 |
The Risk Today
Yann Quelenn
EUR/USD lies in a short-term downtrend channel. Hourly resistance may be found at 1.1096 (28/10/2015 low) while hourly support can be found at 1.0524 (03/12/2015). Expected to show further very short-term increase. In the longer term, the technical structure favours a bearish bias as long as resistance holds. Key resistance is located region at 1.1453 (range high) and 1.1640 (11/11/2005 low) is likely to cap any price appreciation. The current technical deteriorations favours a gradual decline towards the support at 1.0504 (21/03/2003 low).
GBP/USD has exited the downtrend channel. Hourly resistance at 1.4367 (26/01/2016 high). Stronger resistance can be found at 1.5336 (19/11/2015 high). Expected to show further monitoring around 1.4350. The long-term technical pattern is negative and favours a further decline towards the key support at 1.3503 (23/01/2009 low), as long as prices remain below the resistance at 1.5340/64 (04/11/2015 low see also the 200 day moving average). However, the general oversold conditions and the recent pick-up in buying interest pave the way for a rebound.
USD/JPY is increasing. The pair is trading slightly below 119.00. Hourly resistance lies at 123.76 (18/11/2015 high). Hourly support lies can be found at 115.98 (20/01/2016 low). Expected to show further weakness. A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 116.18 (24/08/2015 low).
USD/CHF's uptrend momentum is still lively. Hourly support is located at 0.9876 (14/12/2015 low) and hourly resistance can be found at 1.0199 (26/01/2015 high) and at 1.0328 (27/11/2015 high). Expected to show continued strength. In the long-term, the pair has broken resistance at 0.9448 and key resistance at 0.9957 suggesting further uptrend. Key support can be found 0.8986 (30/01/2015 low). As long as these levels hold, a long term bullish bias is favoured.
Resistance and Support:
| EURUSD | GBPUSD | USDCHF | USDJPY |
| 1.1561 | 1.5336 | 1.1138 | 135.15 |
| 1.1387 | 1.5242 | 1.0676 | 125.86 |
| 1.1095 | 1.4969 | 1.0328 | 123.76 |
| 1.0906 | 1.4324 | 1.0148 | 118.84 |
| 1.0524 | 1.4 | 0.9786 | 115.57 |
| 1.0458 | 1.3657 | 0.9476 | 105.23 |
| 1.0000 | 1.3503 | 0.9259 | 100.82 |
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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