Dollar flat ahead of FOMC decision, US Payrolls report

AUD dips, Q4 CPI next; EUR edges up, EU GDP steady

Summary:

The Dollar Index (DXY), which measures the value of the US Dollar against a basket of 6 major currencies settled flat at 103.42 (103.45) ahead of today’s Federal Reserve FOMC rate decision.

Also set for release this week (Friday, 02 Feb) is the US Non-Farms Payroll report for January. Meantime, the number of Job Openings in the US (JOLTS) unexpectedly rose in December to 9 million from an upwardly revised 8.9 million previously.

Other data released saw the US Conference Board’s Consumer Confidence climb to 114.8, up from estimates at 114.2 and higher than a previously downward adjusted 108.00.

The Australian Dollar (AUD/USD) eased off its highs to 0.6603 from 0.6610 after Australia’s Retail Sales fell 2.7% in January from December. Economists had expected a drop of 1.9%.

Against the Japanese Yen, the Greenback had a more subdued trading session, edging up to 147.63 from 147.40. Japan’s January Jobless Rate improved to 2.4% from 2.5% previously.

The Euro (EUR/USD) climbed to 1.0845 from1.0835. Q4 Eurozone Preliminary Flash GDP rose to 0.0% from -0.1% previously, beating estimates at -0.1%.  Sterling (GBP/USD) dipped to 1.2690 from 1.2710. UK Mortgage Approvals climbed to 50K from 49K, lower than forecasts at 53K.

The US Dollar finished mostly lower against the Asian and Emerging Market currencies (EMFX). USD/CNH (Dollar-Offshore Chinese Yuan) settled at 7.1900 (7.1850).

The USD/THB (Dollar-Thai Baht) pair eased to 35.40 from 35.43. USD/SGD (Dollar-Singapore Dollar) slipped to 1.3390 (1.3405).

Global Share Prices were mixed. The DOW climbed to 38,485 (38,310) while the S&P 500 gained to 4,930 from 4,935. China’s Composite Index slumped 1.83% to 2,830 (2,880).

Other economic data released yesterday saw Japan’s Unemployment Rate fall to 2.4% from 2.5% previously, beating median forecasts at 2.5%. US S&P Case Shiller Composite 20-year House Price Index (y/y) rose to 5.4% from 4.9% previously but missed forecasts at 5.8%.

• EUR/USD – The shared currency finished with modest gains, to 1.0845 from 1.0835 previously. The Euro initially rose to its overnight high at 1.0857 before easing at the New York close. The overnight low recorded was 1.0812.
• USD/JPY – The Greenback rallied initially to its overnight high at 147.93 before easing to 147.63 at the New York close. The overnight low traded was 147.09. Japan’s Jobless Rate improved to 2.4% from 2.5% previously, bettering estimates at 2.5%. Japan releases its Industrial Production and Retail Sales later today.
• AUD/USD – The Aussie Battler dipped to 0.6603 from 0.6610 previously. The Australian Dollar slumped to its overnight low at 0.6575 before stabilizing. The AUD/USD pair grinded higher to 0.6624 overnight highs before easing in late New York trade.
• GBP/USD – Sterling slid against the Greenback to 1.2690 from 1.2710 previously. The overnight low traded for the British Pound was at 1.2640. The overnight high recorded was at 1.2721. The British currency was pounded lower on worse than expected UK Net Lending to Individuals, down to GBP 0.4 billion from GBP 2.1 billion previously.

On the lookout:

Today’s economic calendar starts off with the release of Japan’s Preliminary Industrial Production (m/m f/c 2.5% from -0.9% previously).

Australia follows with its CPI report (q/q f/c 0.8% from 1.2%; y/y f/c 4.3% % from 5.4% - ACY Finlogix). Australia also releases its Quarterly Trimmed Mean CPI (which is the RBA’s preferred gauge of inflation), forecast to dip to 0.9% from 1.2% previously.

China follows with its January NBS (National Bureau of Statistics) Manufacturing PMI (f/c 49.2 from 49.0; Chinese January NBS Non-Manufacturing PMI (f/c 50.5 from 50.4 previously – ACY Finlogix).

Japan follows with its January Consumer Confidence (f/c 37.8 from 37.2 – ACY Finlogix), Japanese December Housing Starts (y/y f/c -6.2% from -8.5% - ACY Finlogix). Japan also releases its December Retail Sales (m/m f/c 0.5% from 1.1%; y/y f/c 4.7% from 5.3% - ACY Finlogix), Japanese Preliminary December Industrial Production (m/m f/c 2.4% from -0.9%; y/y f/c 4.7% from 5.3% - ACY Finlogix).

Germany starts off European data with its German December Retail Sales (m/m f/c 0.7% from -2.5%; y/y f/c -2% from -2.4% - ACY Finlogix). The UK follows with its January Nationwide Housing Prices (m/m f/c 0.1% from 0%; y/y f/c -0.9% from -1.8% - ACY Finlogix).

France follows with the release of French January Preliminary CPI (m/m f/c -0.4% from 0.1%; y/y f/c 3.3% from 4.1% - ACY Finlogix). Germany follows with its January Unemployment Rate (f/c 5.9% from 5.9% - ACY Finlogix).

Italy follows with its December Unemployment Rate (f/c 7.6% from 7.5% - ACY Finlogix). Canada releases its Preliminary December GDP (m/m f/c 0.0% from 0.1% - ACY Finlogix).

The US rounds up today’s economic data releases with its January ADP Non-Farm Employment Change (f/c 145K from 164K – ACY Finlogix). The Federal Reserve is widely expected to keep its Fed Funds Rate at 5.5%.

Trading perspective:

Ahead of tomorrow morning’s release of the Federal Reserve’s FOMC Interest Rate Decision and Press Conference, expect markets to consolidate.

Data releases will also be monitored. The Dollar Index (DXY) finished flat and is poised to move in either direction, depending on the Fed’s Rate decision and release of the latest economic data (see above).

Then there is Friday’s US Payrolls report to finish a busy week. Global bond yields slid with the US 10-year easing to 4.03% (4.07%). Other global treasury rates finished higher.

Germany’s 10-year Bund yield closed at 2.27% (2.24%) while the UK 10-year Gilt rate was last at 3.90% from 3.87%. Australia’s 10-year bond yield tumbled to 4.11% from 4.21%.

Markets will remain cautious heading into the release of the US Fed FOMC meeting minutes and Press Conference from Fed Chair Jerome Powell. Friday’s US Payrolls report follows.

• EUR/USD – The shared currency steadied to 1.0845 in late New York, up modestly from 1.0835 previously. The Euro traded to an overnight high at 1.0857. Look for immediate resistance at 1.0860 followed by 1.0890 and 1.0910. On the downside, look for immediate support at 1.0810 (overnight low traded was 1.0812). The next support level lies at 1.0780 followed by 1.0750. Look for a choppy trading session, likely between 1.0800-1.0900. Preference is to sell Euro on rallies.
• AUD/USD – The Aussie Battler eased modestly to 0.6603 from 0.6610. Today, look for immediate support at 0.6570 (overnight low traded was 0.6575). The next support lies at 0.6540. On the topside, immediate resistance can be found at 0.6625 (overnight high traded was 0.6624). The next resistance level is found at 0.6655 and 0.6685. Look for the Aussie to trade a likely 0.6570-0.6670 range today. Prefer to buy Aussie on weakness.

Source: Finlogix.com

USD/JPY – The US Dollar steadied against the Japanese currency to finish at 147.63. On the day, look for immediate support at 147.30 followed by 147.00 (overnight low traded was 147.09). On the topside, look for immediate resistance at 147.90 to cap (overnight high traded was 147.93). The next resistance level is found at 148.20 followed by 148.50. Look for the USD/JPY pair to consolidate in a likely range today of 147.00 to 148.00.

GBP/USD – Sterling eased to settle at 1.2690 from at 1.2710 previously. Today look for immediate support in the British currency at 1.2660 followed by 1.2630. The overnight low traded was at 1.2640. On the topside, look for immediate resistance at 1.2720 (overnight high traded was 1.2721). The next resistance level can be found at 1.2750 and 1.2780. Look for Sterling to consolidate. Likely range 1.2630-1.2730. Trade the range.

Have a top Wednesday and trading day ahead all.