As the CPI dipped for the first time in eight years the AUD-related crosses took a big hit. We have also seen yen strength as BoJ's Fukui was out earlier saying that he supports a higher rate in Japan.
MAJOR HEADLINES – PREVIOUS SESSION
Today's biggest mover within the majors, the AUDUSD, took a giant leap downwards as the CPI for Q4 came out QoQ/YoY at -0.1%/3.3% vs. 0.2%/3.6% expected. This is the first time in eight years that the CPI pointed lower, indicating that the Australian Central bank will pause hiking rates as inflation is falling. Most in the market had traded the pair higher on back of expectations towards a higher rate from 6.25%, which is why the pair tumbled down 1.39% - from 0.7929 to 0.7834 in today's trading session. The pair is still between 0.7760-0.8000 and we are observing these levels as a brake-out is possible from there.
The yen regained some strength as there's speculation that the interest-rate gap between Japan and the UK and Australia won't widen. This was present as the Australian CPI fell in Q4 poiting towards a stable rate and the Bank of England was out saying that their surprise-hike only was backed up by a 5-4 vote. GBPJPY fell initially from yesterdays close 241.01 to 238.04 today, but it has come back somewhat to 239.53.
The EURUSD has fallen 0.32 pct. as stated below, but is stuck around 1.3000.
In writing moment the Bank of Norway has been out hiking rates 25 bp to 3.75%, which has weakened the EURNOK and USDNOK considerably.
From Yesterday:
EURUSD
Yesterday evening we had Fed's Yellen speaking about the US economy and also the minutes from the Bank of Japan from the December meeting. Unfortunately none of them were very interesting, as there were no surprises in the statements, and the market acted accordingly. This morning the euro started of well, as it was supporteed by very positive figures from the French Consumer Spending. The monthly figures came out at 1.3% vs. 0.3% expected, and the yearly figure topped at 6.8% vs. 4.9% expected, sending the EURUSD higher. Later the Industrial Orders from the Euro-Zone supported the cross additionally as they also suprised to the upside. The market expected an in crease MoM/YoY at 1.1%/5.7, but the figures came out at 1.4%/6.2% - way better than expected. The EURUSD broke the 1.3000-level on the figures and is now trading at 1.3035. We see the pair in a range at the moment and will not touch it until it brakes either 1.3480 to the upside or 1.2870 on the downside.
EURJPY
The EURJPY touched new highs today - we were long from 157.12 and took profit at 158.05 as increased pressure on the ECB to raise rates became present as ECB's Draghi and EU's Almunia commented on the outlook for the Euro-Zone. Draghi declined commenting on the inflation outlook, but Bundebank's Reckers said, that ECB has to be 'vigilant' on the inflation. The 'vigilant'-theme was not present at the last rate announcement and the fact that it is now beeing brought back, took the EUR higher. At the same time revealed the BoJ comments that the central bank officials have to take another look at the economy to comment on a potential rate hike. This added speculation in the market that the BoJ will not hike at the next meeting in Februar, taking the yen further down.
FX Orderbook
Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur
Euro/US Dollar
EURUSD (1.3003 @ 13:16 GMT)
Support:
1. 1.2980 uper end of 6-month range
2. 1.2765 key support for rising wave lows.
3. 1.2460 daily base support
Resistance:
1. 1.3367 highs from early December.
2. 1.3480 old top from March 2005.
1. 1.3190 Congestion zone through holiday trading.
Resist.
1.3232
1.3116
1.3071
1.3003
1.2954
1.2883
1.2767
Support
British Pound/US Dollar
GBPUSD (1.9718 @ 13:16 GMT)
Support:
1. 1.9500 January 2005 old top.
2. 1.9190 November's 2006 breakout level.
3. 1.8950 wave lows from late November 2006.
Resistance:
1. 1.9750 Double top from December 2006.
1. 1.9916 highs from 2007.
2. 2.0100 highs from August 1992.
Resist.
2.0156
1.9991
1.9902
1.9718
1.9737
1.9662
1.9498
Support
US Dollar/Japanese Yen
USDJPY (121.53 @ 13:16 GMT)
Support:
1. 114.45 wave low from December 2006.
2. 113.35 weekly base support.
3. 109.00 key support form confirmation of a monthly downward trend.
Resistance:
1. 119.90 old top from mid-October.
2. 121.40 old top from December 2005.
Resist.
122.78
122.14
121.88
121.53
121.24
120.85
120.21
Support
