Forex News and Events

EU summit in focus (by Arnaud Masset)

The Brexit story continues to be at the front stable as little progress have been made so far. In the wake of last Tuesday’s disappointing inflation report - CPI printed at -0.8%m/m versus -0.7% expected but matched estimates on a year-over-year basis, while the core gauge slip to 1.2%y/y versus 1.3% expected - the pound sterling continues to suffer from this highly uncertain situation as GBP/USD was stuck under the 1.45 threshold since Tuesday. Even though the odds of reaching an agreement at the current are very, we cannot ruled it out as David Cameron is striving to get EU leader to agree to his proposed reforms. We do not expect a deal to be reached at this summit as the UK will likely try to leverage its position for the next summit. GBP/USD will therefore under pressure as GBP bulls prefer to remain sidelined for now.

Markets' optimism on US CPI (by Yann Quelenn)

US Inflation data will be released today. Traders will analyse these figures carefully as concerns remain regarding the true state of the economy. Indeed, policymakers are long awaiting a pick-up in inflation on the back of the sharp improvement in labour conditions. The unemployment rate has fallen below 5%, which many consider as representing full employment. Wage growth is also trending higher, as we can see from the last average hourly earnings data, which increased 2.5% in January. However, these better jobs conditions have not translated into more inflation and we think it is because of two main reasons.

Firstly, the unemployment rate is fairly low but we think that it is largely undervalued (many jobless workers are eventually pulled out of the statistics) so wage growth remains subdued as competition puts downside pressures on salaries. Secondly, the overall global situation has Americans alarmed, resulting in a clear preference for personal savings which rose to 5.5%, the highest level in three years. Flat January retail sales confirm this fact after an already disappointing December.

We do not see the current trend in personal savings going anywhere anytime soon as global concerns linger and we remain more pessimistic than the market regarding current CPI which we believe should print lower than expected, driven by very low oil prices.

Today's Key IssuesCountry/GMT
Feb Consumer Confidence Indicator, exp 3,5, last 4,6DKK/08:00
Feb Consumer Confidence Index, exp 71,2, last 71,62TRY/08:00
Feb 12 Money Supply Narrow Def, last 8.21tRUB/08:00
Jan Unemployment Rate, exp 7,60%, last 6,70%SEK/08:30
Jan Unemployment Rate Trend, last 7,10%SEK/08:30
Jan Unemployment Rate SA, exp 7,10%, last 7,20%SEK/08:30
Jan Retail Sales Ex Auto Fuel MoM, exp 0,70%, last -0,90%GBP/09:30
Jan Retail Sales Ex Auto Fuel YoY, exp 3,40%, last 2,10%GBP/09:30
Jan Retail Sales Inc Auto Fuel MoM, exp 0,80%, last -1,00%GBP/09:30
Jan Retail Sales Inc Auto Fuel YoY, exp 3,60%, last 2,60%GBP/09:30
Jan Public Finances (PSNCR), last 8.1bGBP/09:30
Jan Central Government NCR, last 20.5bGBP/09:30
Jan Public Sector Net Borrowing, exp -13.9b, last 6.9bGBP/09:30
Jan PSNB ex Banking Groups, exp -12.3b, last 7.5bGBP/09:30
Feb IGP-M Inflation 2nd Preview, exp 1,31%, last 0,83%BRL/10:00
Bloomberg Feb. Sweden Economic SurveySEK/10:00
Bloomberg Feb. Norway Economic SurveyNOK/10:05
Bloomberg Feb. Denmark Economic SurveyDKK/10:10
Nov National Unemployment Rate, exp 9,00%, last 9,00%BRL/11:00
Fed's Mester to Speak at Global Interdependence CenterUSD/13:30
ECB's Vítor Constâncio Speaks in New YorkEUR/13:30
Dec Retail Sales MoM, exp -0,90%, last 1,70%CAD/13:30
Dec Retail Sales Ex Auto MoM, exp -0,70%, last 1,10%CAD/13:30
Jan CPI NSA MoM, exp 0,00%, last -0,50%CAD/13:30
Jan CPI YoY, exp 1,80%, last 1,60%CAD/13:30
Jan Consumer Price Index, exp 126,3, last 126,5CAD/13:30
Jan CPI MoM, exp -0,10%, last -0,10%USD/13:30
Jan CPI Core MoM, exp 0,20%, last -0,40%CAD/13:30
Jan CPI Ex Food and Energy MoM, exp 0,20%, last 0,10%, rev 0,20%USD/13:30
Jan CPI Core YoY, exp 1,90%, last 1,90%CAD/13:30
Jan CPI YoY, exp 1,30%, last 0,70%USD/13:30
Jan CPI SA MoM, exp -0,10%, last 0,10%CAD/13:30
Jan CPI Ex Food and Energy YoY, exp 2,10%, last 2,10%USD/13:30
Jan CPI Core SA MoM, exp 0,20%, last 0,10%CAD/13:30
Jan CPI Index NSA, exp 236,606, last 236,525USD/13:30
Jan CPI Core Index SA, exp 244,808, last 244,446, rev 244,516USD/13:30
Jan Real Avg Weekly Earnings YoY, last 1,60%, rev 1,70%USD/13:30
Feb A Consumer Confidence, exp -6,6, last -6,3EUR/15:00
Bloomberg SURVEY: Private Capital Expenditure 2016-17 A$92.8BAUD/23:00


The Risk Today

Yann Quelenn

EUR/USD keeps on pushing lower. The short-term technical structure suggests a further bearish move. Hourly support at 1.1070 (04/02/2016 low) has been monitored. Hourly resistance lies at 1.1260 (10/02/2016 high). 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 is trading above 1.4300. Hourly resistance at 1.4338 (17/02/2016 high) has been broken. Resistance can now be found at 1.4394 (18/02/2015 high). Hourly support can be found at 1.4235 (17/02/2015 low). The technical structure suggests further bullish consolidation before entering into another downside move. 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 weakening. The medium-term technical structure is clearly negative. Hourly support can be found at 112.71 (19/02/2016 low). Hourly resistance lies can be found at 114.87 (16/02/2016 high). Expected to further decline. The strong support at 115.57 (16/12/2014 low) has been broken and fully erased. We start favouring a long-term bearish bias. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems now less likely. Another key support can be found at 105.23 (15/10/2014 low).

USD/CHF keeps on increasing. The short-term succession of higher lows favours a bullish bias. Hourly resistance can be found at 0.9985 (05/02/2016 low). Hourly support is given at 0.9847 (16/02/2016 low). Expected to see further strengthening. In the long-term, the pair is setting highs since mid-2015. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours a long term bullish bias.


Resistance and Support:

EURUSDGBPUSDUSDCHFUSDJPY
1.15611.49691.0328117.53
1.13761.46681.0257115.17
1.12611.45910.9985114.91
1.10891.43130.9955112.95
1.1071.4150.9847110.99
1.07111.40810.966105.23
1.05241.36570.9476100.82

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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