After a quiet beginning of the week, we have seen volatility increasing as the U.S markets are set to open today after being close yesterday.
Looking at the European figures, German CPI came out in line with estimates at -0.1% and 0.3% in both a monthly and yearly basis.
In the opposite, ZEW survey for the current situation jumped to 59.7 in January up from 55.0 previously while the survey expectations fell to 10.2 down from 16.1 in December.
In the Eurozone, ECB Current account increased by 26.4B in November, in the meantime, the current account NSA has reached 29.8B in the same month compared to 27.5B earlier.
Few minutes later, both the Eurozone CPI MoM and YoY came out as expected at 0.0% and 0.2% respectively.
In the other side, the UK inflation figures has exceeded analysts’ estimates as the CPI MoM ticked up to 0.1% against 0.0% expected, while the YoY numbers remain unchanged at 0.2%.
In addition, retail price index increased slightly to 260.6 against 260.3 expected in December.
The British pound jumped following these positive releases and advanced to as high as 1.4340 level, which coincide with the 50% retracement of the recent recovery from 1.4250 to 1.4475 peak, before to see strong selling pressure at this level.
Finally yet importantly, the U.S NAHB housing market index declined to 60 during this month compared to 61 estimated.
Technically, we have seen a boost in commodity currencies as both Aussie, Kiwi and CAD gained ground today against the U.S Dollar. Meanwhile, both the Japanese Yen and Gold weakened across the board as market participants escaped the safe haven assets.
USD/JPY overtook 118.00 psychological barrier for a while before to stabilize around 117.80 level.
Overall, we have seen a choppy market today but the focus was on the British pound as GBP/USD failed to preserve its early gains. The pair fell sharply after Carney’s dovish comment; BoE governor said that the time is not appropriate yet for the BoE to begin raising rates.
GBP sold-off immediately, and managed to break below 1.4200 psychological support, reinforcing our bearish outlook in the med-term. EUR/GBP flew to new highs and the pair has reached 0.7700 level, gaining more than 200 pips since our last report about this pair.
EURGBP : Between 8/1/2016 and today 19/1/2016
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