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Daily Market Review : 31st January 2013

By  |  Forex  |  Jan 31, 2013 11:01AM GMT  |   Add a Comment
 
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Today’s highlights:

  • Nationwide HPI (MoM) (GB, 07:00 GMT)
  • French Consumer Spending (MoM) (Fra, 07:45 GMT)
  • German Unemployment Rate (Ger, 08:55 GMT)
  • Norwegian Core Retail Sales (MoM) (Nor, 09:00 GMT)
  • German CPI (MoM) (Ger, 13:00 GMT)
  • GDP (MoM) (Can, 13:30 GMT)
Core PCE Price Index (MoM) + Employment Cost Index (QoQ) + Initial Jobless Claims + Personal Spending (MoM) (U.S, 13:30 GMT)

Chicago PMI (U.S, 14:45 GMT)

The Federal Reserve will keep purchasing securities at the rate of $85 billion a month after the economy paused because of temporary forces including bad weather. “Growth in economic activity paused in recent months in large part because of weather-related disruptions and other transitory factors,” the Federal Open Market Committee said yesterday at the conclusion of a two-day meeting in Washington. While, the economy in the U.S. unexpectedly came to a standstill in the fourth quarter as the biggest plunge in defense spending in 40 years swamped gains for consumers and businesses. Gross domestic product dropped at a 0.1 percent annual rate, the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed yesterday in Washington.

The Bank of Japan (8301) could add further stimulus if warranted by economic and price conditions, Deputy Governor Hirohide Yamaguchi said. “It could be the case that further accommodation will be pursued,” Yamaguchi, whose term ends in March, said in a speech in Nagasaki today. “The bank intends to make as decisive policy responses as ever while steadily examining the situation of economic activity and prices.”

EUR/USD: The EUR/USD was trading higher at 1.35684 at the time of writing after the Federal Reserve’s decision yesterday to maintain its asset-purchase program and the U.S. government revealed the economy contracted in the fourth quarter. Today, investors should remain prudent on the pair as a series of economic data will be released in the Euro area and the U.S. In the European session ahead, France will release its Consumer Spending (MoM) (Forecast to remain unchanged at 0.2%), Germany will release its Unemployment Rate (Forecast to come flat at 6.9%) and the CPI (MoM) (Forecast: -0.4% - Previous: 0.9%). Later in the day, the U.S will release the Core PCE Price Index (MoM) (Forecast: 0.1% - Previous: 0.0%), the Personal Spending (MoM) (Forecast: 0.3% - Previous: 0.4%), the Employment Cost Index (QoQ) (Forecast: 0.5% - Previous: 0.4%) and the Chicago PMI (Forecast: 50.5 – Previous: 50.0). The key risk event for the pair will be the U.S Initial Jobless Claims. U.S. applications for unemployment insurance payments rose by 21,000 to 351,000 in the week ended Jan. 26; the Labor Department is forecast to report today, according to the median estimate of economists in a Bloomberg News survey. A higher than expected reading will be bullish for the EUR/USD. Some profit takings is expected intra trade. A wait and see approach will be a good strategy on the pair. The resistance level is at 1.36397 and the support level is at 1.34766.

<span class=EUR/USD" title="EUR/USD" width="682" height="352" />
USD/CAD: The USD/CAD was trading higher at 1.00249 at the time of writing as data showed the economy of the nation’s largest trading partner unexpectedly shrank in the fourth quarter. Today, some fluctuations are expected on the pair as a few important economic data will be released both in the Canada and the U.S. Canada will release its GDP (MoM) figures which are forecast to show growth increased to 0.2 percent in November from 0.1 percent the month before, according to the median estimate of a Bloomberg survey of 24 economists. On the other hand, the U.S will release the Core PCE Price Index (MoM) (Forecast: 0.1% - Previous: 0.0%), the Personal Spending (MoM) (Forecast: 0.3% - Previous: 0.4%), the Employment Cost Index (QoQ) (Forecast: 0.5% - Previous: 0.4%) and the Chicago PMI (Forecast: 50.5 – Previous: 50.0). The key risk event for the pair will be the U.S Initial Jobless Claims. U.S. applications for unemployment insurance payments rose by 21,000 to 351,000 in the week ended Jan. 26; the Labor Department is forecast to report today, according to the median estimate of economists in a Bloomberg News survey. Yet again a wait and see approach is recommended. The resistance level is at 1.00497 and the support level is at 1.00056.
<span class=USD/CAD" title="USD/CAD" width="688" height="353" />
Gold: Gold climbed for a third day toward a one-week high after data showed that the U.S. economy unexpectedly shrank and the Federal Reserve maintained asset purchases. The yellow metal was trading higher at 1679.175 at the time of writing. The market sentiments remain bullish on the commodity. Events likely to affect the movement of the commodity are the Core PCE Price Index (MoM) (Forecast: 0.1% - Previous: 0.0%), the Personal Spending (MoM) (Forecast: 0.3% - Previous: 0.4%), the Employment Cost Index (QoQ) (Forecast: 0.5% - Previous: 0.4%) and the Chicago PMI (Forecast: 50.5 – Previous: 50.0) in the U.S. The key risk event will be the U.S Initial Jobless Claims. U.S. applications for unemployment insurance payments rose by 21,000 to 351,000 in the week ended Jan. 26; the Labor Department is forecast to report today, according to the median estimate of economists in a Bloomberg News survey. Investors should closely monitor all these data to get visibility. Gold and the USD often trade inversely to one another. The resistance level is at 1685.953 and the support level is at 1662.743.
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