Posted on: 02 February 2016, by: Pepperstone Support, category: Market Review
The correction in USDCAD was inspired by signs of WTI firming and stuck, despite WTI settling at session lows near 31.40/35.
The saw a squeeze lower in early NY trading, taking USDJPY down to 120.67. It now tests 121.00 but should pressure resume, note support in the 120.80 region followed by 120.00/10.
EURUSD had a firm topside bias from 1.0840 towards 1.0915, with domestic events having no impact:
ECB President Draghi spoke after the NY open. Comments were dovish but not different from what we heard at the January press conference.
ECB’s Coeure said the governing council will “review and possibly reconsider its stance when it meets in March” but also called for strong political commitment to complete the Economic and Monetary Union. EURUSD slipped about 10pips on the initial headlines but soon bounced back.
ECB’s Nowotny, meanwhile, leaned against the overtly dovish sentiment, saying it’s premature to discuss the value of cutting rates other than the main depo rate, and reiterated the market expected too much from the ECB in December and “should learn their lessons”.
Eurozone manufacturing PMI remained at 52.3 in the January final reading. The country-level data was a bit mixed with the Spanish PMI surpassing the expectation (55.4 vs 52.5 est) while the Italian PMI missing the mark (53.2 vs 54.8 est). France PMI remains at breakeven (50) as the flash reading, while German PMI was revised up a touch from 52.1 to 52.3.
In the UK, manufacturing PMI recovered further to 52.9 in January, beating the forecasted 51.6. The December PMI was also revised up from 51.9 to 52.1.
GBPUSD traded a touch lower post the data initially, with demand in EURGBP also weighing on spot. However, broader USD heaviness saw it rally back to 1.4445. EURGBP corrected down to 0.7542.
Scandies manufacturing PMIs pointed to a potential NOKSEK recovery in the short- term:
Norwegian manufacturing PMI recovered further to 49.2 in January from an upwardly revised 47.1 in December, better than the forecasted 46.0.
Swedish manufacturing PMI eased to 55.5 in January versus 56.0 forecasted.
The RBA meets Tuesday. All but one economist expects the rate to stay at 2.0%, so the tone is key for AUD going forward.