The markets went to test nearby support and resistance after the Fed’s Monetary Policy Statement was released yesterday. The Interest Rate was left unchanged and only small parts of the text were altered. The statement added that the expectations would “warrant FURTHER gradual increases in the federal funds rate” (adding the word “further”). They also dropped a line saying “inflation will remain below 2% in near term”. It is expected that there will be three tightening moves in 2018, with the March meeting a ‘live’ meeting in terms of a hike. EURUSD tested resistance at 1.24378 and support at 1.23866 and has stayed in this range since. GBPUSD tested support at 1.41508 and resistance around 1.42107 and has largely maintained that range since. Gold found support at 1332.50 and tested a high of 1344.40, later getting to a high of 1347.50.
US EIA Crude Oil Stocks Change (Jan 26) showed a surprise build of 6.776M against an expected 0.126M, from a previous reading of -1.071M.
French Consumer Price Index (EU norm) (YoY) (Jan) was released coming in at 1.5% against an expected 1.1%, from 1.2% previously.
German Unemployment Change (Jan) was -25K v an expected -17K, from -29K previously, which was revised down to 30K. Unemployment Rate s.a. (Jan) was 5.4% v an expected 5.5%, against 5.5% prior. EURUSD moved higher from 1.24323 to a high of 1.24596 after this data release.
Eurozone Unemployment Rate (Dec) was as expected, unchanged at 8.7%. Consumer Price Index – Core (YoY) (Jan) was as expected at 1.0%, from 1.1% prior. Consumer Price Index (YoY) (Jan) was also as expected at 1.3, from 1.4% previously. EURUSD sold off from its high at 1.24596 to 1.24391 before rebounding higher again.
US ADP Employment Change (Jan) was 234K v an expected 185K, from 250K previously, which was revised down to 242K. Employment Cost Index (Q4) was as expected at 0.6%, from 0.7% previously. USDJPY moved up from 108.843 to 108.981 following this data release.
US Chicago Purchasing Managers’ Index (Jan) was 65.7 v an expected 64.1, from a prior read of 67.8, which was revised up from 67.6.
Pending Home Sales (YoY) (Dec) was -1.8% v an expected -0.2%, from a prior reading of 0.6%. Pending Home Sales (MoM) (Dec) was 0.5% v an expected 0.4%, from a prior reading of 0.2%, which was revised up to 0.3%. GBPUSD tested support at 1.41644 before moving higher to 1.42320.
Chinese Caixin Manufacturing PMI (Jan) was 51.5 v an expected 51.3, from 51.7 previously, which was revised down to 51.5. This shows an improvement at a modest pace.
EURUSD is down -0.13% overnight, trading around 1.23971.
USDJPY is up 0.32% in early session trading at around 109.531.
GBPUSD is down -0.16% to trade around 1.41660.
USDCAD is up 0.05%, trading around 1.23187.
Gold is down -0.21% in early morning trading at around $1,341.80.
WTI is unchanged this morning, trading around $64.68.
Major data releases for today:
At 08:15 GMT, Swiss Real Retail Sales (YoY) (Dec) will be released with an expected 1.5% from -0.2% previously.
At 08:55 GMT, German Markit Manufacturing PMI (Jan) is expected to be unchanged at 61.2. EUR crosses could be affected by this data.
At 09:00 GMT, Eurozone Markit Manufacturing PMI (Jan) is expected to be unchanged at 59.6. EUR pairs may be moved by this release.
At 09:30 GMT, UK Markit Manufacturing PMI (Jan) is expected to be 56.5 from 56.3 previously. GBP pairs may be moved by this release.
At 13:30 GMT, US Continuing Jobless Claims (Jan 19) is expected to be 1.928M from 1.937M previously. Initial Jobless Claims (Jan 26) is expected to come in at 238K from 233K previously. Nonfarm Productivity (Q4) is expected to be in at 1% from 3% previously. Unit Labour Costs (Q4) is expected to be 0.8% from -0.2% prior. USD crosses could see an increase in volatility from this data release.
At 14:30 GMT, Canadian Markit Manufacturing PMI (Jan) is expected to be 54.8 from 54.7 previously. CAD crosses could be moved by this release.
At 14:45 GMT, US Markit Manufacturing PMI (Jan) is expected to be 54.9 from 55.5 previously. USD pairs may be moved by this release.
At 15:00 GMT, US ISM Prices Paid (Jan) is due out with a consensus of 68.0 expected. The previous reading was 69.0. ISM Manufacturing PMI (Jan) is also out at this time, with an expectation for a number of 58.8 v 59.7 prior, which was revised down to 59.3. And finally, Construction Spending (MoM) (Dec) is expected at 0.4% from the previous reading of 0.8%. USD crosses could be impacted by the volume of data releases at this time and turbulent price action can result.
At 19:00 GMT, New Zealand Building Permits s.a. (MoM) (Dec) will be released, with a previous reading of 10.8%. NZD crosses may experience volatility during this time.