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FxPro Forex Analysis: Volatility Continues as Risk-Off Reigns


The shock in stock markets continues, as yesterday was the worst since August 2011. US stock markets were some of the worst hit, with the US 30 (DOW) falling -4.60% or 1175.2 points. WTI Crude Oil futures fell 2.70% or $1.82, while Gold has a modest rise given the volatility, up $5.88 or 0.44% to $1339.00. Bitcoin was down again, at $7175, dropping $890, with a close below its 200-Day moving average. The USD strengthened along with the JPY, which outperformed all comers. Safety was sought in US Debt with yield moving lower, 10-year by 2.709%, -13.1 basis points. The high yield reached 2.8831%.

Spanish Markit Services PMI (Jan) was 56.9 v an expected 55.4, from a prior reading of 54.6.

German Markit PMI Composite (Jan) was 59.0 v an expected 58.8, from a previous reading of 58.8. Markit Services PMI (Jan) was 57.3 v an expected 57.0, from a previous reading of 57.0.

Eurozone Markit PMI Composite (Jan) was 58.8 v an expected 58.6, from a previous reading of 58.6. Markit Services PMI (Jan) was 58.0 v an expected 57.6, from a previous reading of 57.6. EURUSD fell to 1.24559 before recovering to 1.24746, while the Germany 30 Index fell to 12708.00 and then recovered to 12755.20 due to this data release.

UK Markit Services PMI (Jan) was 53.0 v an expected 54.3, from a prior reading of 54.2. GBPUSD closed at a daily high of 1.41501 just before the release of this data and started its decline when the data was released to reach a low of 1.39867 some hours later.

US Markit Services PMI (Jan) was as expected, unchanged at 53.3. Markit PMI Composite (Jan) was 53.8 v an expected 53.9, from a previous reading of 53.8. US ISM Non-Manufacturing PMI (Jan) was 59.9, beating the expected 56.5, from 56.0 previously, which had been revised up from 55.9. USDJPY continued its climb higher to 110.259 before selling off.

Australian Retail Sales s.a. (MoM) (Dec) was -0.5% v an expected -0.2%, from a prior 1.2%, which was revised up to 1.3%. Trade Balance (Dec) was -1358M, a large miss compared to the expected 200M, from a previous -628M, which was revised up to 36M. Imports (Dec) were 6% from 1% previously. Exports (Dec) were 2% from 0% previously. AUDUSD dropped from 0.78898 to 0.78692 following the data release.

Royal Bank of Australia Interest Rate Decision was left unchanged at 1.5%. The Rate statement was released at the same time. RBA said that AUD remains within the range it has been in over the past two years on a trade-weighted basis. Rising AUD would result in a slower economy and inflation. AUDUSD was moved down from 0.78740 to 0.78351 by this release.

EURUSD is up 0.10% overnight, trading around 1.23790.

USDJPY is down -0.14% in the early session trading at around 108.898.

GBPUSD is up 0.11% to trade around 1.39722.

USDCAD is unchanged overnight, trading around 1.25390.

AUDUSD is down -0.33% overnight at around 0.782881.

Gold is up 0.28% in early morning trading at around $1,342.99.

WTI is down -0.09% this morning, trading around $63.24.

Major data releases for today:

At 09:00 GMT, German Bundesbank President Weidmann will speak in Frankfurt. He will deliver opening remarks at a Buba lecture.

At 13:30 GMT, US Trade Balance (Dec) is expected to be $-52.0B from a previous $-50.5B.

At 13.30 GMT, Canadian International Merchandise Trade (Dec) is expected to be $-2.20B from a prior reading of $-2.54B.

At 13:50 GMT, US Fed’s Bullard will be speaking. USD crosses could experience volatility around this time in reaction to his comments.

At 15:00 GMT, Canadian Ivey Purchasing Managers Index (Jan) was 49.3 previously. Ivey Purchasing Managers Index s.a. (Jan) is expected at 61.0 from a previous 60.4. CAD pairs may be moved by this release.

At 21:45 GMT, New Zealand Unemployment Rate (Q4) is expected to be unchanged at 4.6%. Employment Change (Q4) is expected to be 0.2% from a prior 2.2%. Participation Rate (Q4) is expected to be 70.8% from a prior 71.1%. NZD can see a spike in volatility after this data is released.

At 22:30 GMT, Australian AiG Performance of Construction Index (Jan) will be released, with a prior value of 52.8. AUD can move to test key levels with this data acting as a catalyst.

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