Alpesh Patel
InvestingBetter.com
General market theme
Currency markets continue to find it hard to pick up momentum towards any direction as the outlook of the major currencies is still mixed and investors’ bias is not yet clear. The new year was expected to be a strong period for the US Dollar that end 2015 on a high but instead of that investors came back to their desks to find the Asian markets crashing, oil dropping to unexpected lows and the global economy slowing down even more. All these factors are contributing to the general lack of direction and until we get a more clear outlook we should expect more choppy price action.
Price action highlights
Instability was again the important word describing yesterday’s price action, the Euro was one a bearish ride during the European and US session testing its recent lows of 1.0870 but the during the Asian hours the currency recovered and at this time is trading above the 1.0900 pivot level.
The Cable remained bearish and stagnant wage growth didn’t help the UK currency overcome the 1.4200 resistance level. The support lies at the 1.4120 area and fresh lows should clear the path towards the 1.4000 area after BoE Carney made it clear that there will be no rate hike at this time.
Focus of the day
Today the focus will be on the Euro and the ECB as the central bank will meet this morning to discuss their monetary policy. The European policymakers have to tackle the drop in oil prices and the global economy’s slowdown while the volatility caused by the Asian stock market crashes is not helping their mandate.
If Draghi appears concerned and hints towards further QE to support their agenda then the Euro might make its way towards the 1.0800 level while a cheaper Euro might allow the stock markets to attempt a recovery rally.
Economic Calendar
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