Japanese Yen Reaches Key Psychological Area Against the Dollar

USDJPY found support ahead of 110.000 yesterday, with a low of 110.330. The area is a key psychological support for the pair finding buyers to reverse the recent bout of selling. A drop below the 110.000 level has prompted intervention from authorities in the past, as the countries’ Equities Indices come under pressure from the exchange rate.

UK MPC Member Teneyro gave a speech entitled ‘The Fall in Productivity Growth: Causes and Implications’ at the Queen Mary University of London on Monday evening. She said that there was ample time before BOE would need to change rates again. She expects a couple of more rate hikes over the next three years if the economy performs as expected. Productivity risks might be skewed to the upside. She also made the comment that there are huge problems with the way GDP is measured and that it is unclear how productive self-employed workers are.

Eurozone Trade Balance n.s.a. (Nov) was released with the number coming in at €26.3B. The expected number was €28.2B from €18.9B prior. Eurozone Trade Balance s.a. (Nov) was €22.5B v an expected €22.3B, from €19.0B previously. EURUSD moved higher from 1.22600 to 1.22963 after the data was released.

New Zealand NZIER Business Confidence (QoQ) (Q4) was in at -12% from 5% previously. Also released was Electronic Card Retail Sales (MoM) (Dec) coming in as expected at 0.5, from 1.2% previously, that was revised up to 1.3%. Electronic Card Retail Sales (YoY) (Dec) were 3.3% v a prior reading of 4.3%.

Japanese All Industry Activity Index (MoM)(Nov) was 1.1% v 0.4% expected, from 0.3% previously, which was revised down to 0.2%. USDJPY moved higher from 110.695 to 110.934 following the data release.

EURUSD is up 0.05% overnight, trading around 1.22693.

USDJPY is up 0.27% in early session trading at around 110.819.

GBPUSD is up 0.03% to trade around 1.37939.

USDCAD is down -0.02%, trading around 1.24253.

Gold is up 0.06% in early morning trading at around $1,340.39.

WTI is down -0.39% this morning, trading around $64.41.

Major data releases for today:

At 07:00, German Harmonised Index of Consumer Prices (YoY) (Dec) will be released. The consensus is for an unchanged value of 1.6%. Wholesale Price Index (MoM) (Dec) is expected to be 0.3% from 0.5% previously. Wholesale Price Index (YoY) (Dec) was 3.3% previously. EUR pairs may have positions opened or closed due to this data.

At 09:30 GMT, UK Consumer Price Index (YoY) (Dec) is expected out at 3.2% v 3.1% previously. Core Consumer Price Index (YoY) (Dec) is expected unchanged at 2.7%. Consumer Price Index (MoM) (Dec) is expected at 0.6% from 0.3% prior. Producer Price Index – Output (MoM) n.s.a. (Dec) is expected at 0.1% from 0.3% previously. Producer Price Index – Output (YoY) n.s.a. (Dec) is expected at 2.8% from 3.0% previously. Producer Price Index – Input (MoM) n.s.a. (Dec) is expected at 0.5% from 1.8% previously. Producer Price Index – Input (YoY) n.s.a. (Dec) is expected at 6.0% from 7.3% previously. PPI Core Output (MoM) n.s.a. (Dec) is expected at 0.1% from 0.2% previously. PPI Core Output (YoY) n.s.a. (Dec) is expected at 2.1% from 2.2% previously. GBP crosses could be moved by the data released at this time.

At 17:00 GMT, SNB Chairman Jordan will speak at the University of Zurich in a speech titled ‘How money is created by the central bank and the banking system.’ His comments could move CHF crosses.

At 23.30 GMT, Australian Westpac Consumer Confidence (Jan) will be released. The previous reading was 3.6%. This release can affect AUD pairs.

At 23:50, Japanese Machinery Orders (YoY) (Nov) will be released with a consensus of -0.7% expected from 2.3% prior. Machinery Orders (MoM) (Nov) will be released with a consensus of -1.4% expected from 5.0% previously.