ECB, BoE and SNB hold the line
|The markets were busy yesterday as central bank monetary policy meetings continued. After the Fed's rate hike decision on Wednesday, Thursday was all about the central banks in Europe.
The ECB's monetary policy meeting saw the central bank leaving monetary policy unchanged. The ECB gave its economic projections which saw an upbeat forecast. However inflation was expected to still remain below the ECB's 2% inflation target rate by 2020.
The SNB's meeting was largely a non-event. Focus was mostly on the BoE's meeting. The central bank sounded optimistic that inflation was nearing its peak at 3.1%. It however said that GDP growth could slow in the coming quarters. The BoE expects a weaker Q4 GDP growth.
Looking ahead, the economic calendar today is quiet for the most part. The trade balance figures from the Eurozone are expected to be released earlier in the day while BoE Chief Economist Andy Haldane is expected to speak.
In the NY Trading session, the Canadian manufacturing sales report will be coming out and the NY Fed will be releasing the Empire State Manufacturing index report. Economists forecast the index will slightly dip to 18.8 for December.
EURUSD intra-day analysis
EURUSD (1.1781): The EURUSD posted declines yesterday as the ECB left the monetary policy unchanged. The long term inflation forecasts showed that consumer prices in the Eurozone could remain below the ECB's inflation target rate. This hit the sentiment in the euro which extended losses. However, as price action remains supported above the 1.1710 level of support, the bias remains to the upside. On the intraday basis, the reversal near the resistance level of 1.1822 signals a continuation to the downside. The intraday support at 1.1710 could be tested in the near term as the currency pair can be seen maintaining a sideways range within the levels mentioned.
USDJPY intra-day analysis
USDJPY (112.36): The USDJPY extended declines for the second day as price action is seen now trading close to the support level at 112.04 region. In the short term, establishing support at this level could signal a bounce to the upside. USDJPY is expected to maintain the range within 113.00 and 112.04 levels of resistance and support. A breakout from either of these levels is expected to show further gains or declines. To the downside, the next support below 112.04 comes in at 111.61 - 111.57 region.
NZDUSD intra-day analysis
NZDUSD (0.7010): The New Zealand dollar was seen trading weaker yesterday. However, the declines were limited to the initial support level at 0.6891. Following the decline to this support, price action has posted a reversal. A close above the previous high is required in order for NZDUSD to extend the gains towards 0.7062 level of resistance. However, in the event of a failure to post fresh highs, NZDUSD could be at risk of breaking the support level. This could see price declining towards the next lower support at 0.6912.
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