January’s preliminary PMI figures in focus

The USD remained rather stable against a number of its counterparts as market attention turns towards the release of the Fed’s interest rate decision on Wednesday while on a monetary level we also note the release from Canada of BoC’s interest rate decision the same day. It should be noted that the Loonie retreated against the USD, despite the bullish tendencies of oil prices as Canada’s retail sales for November missed their target, came out lower and disappointed CAD traders. Market focus today seems to be turning towards the release of the preliminary PMI figures for January from France, Germany, the UK and the US. We intend to focus on Germany’s Manufacturing sector’s reading which is considered the area’s economic powerhouse as well as UK’s services sector reading given that a substantial part of UK’s GDP comes from that sector.

Should the readings actually rise we may see the related currencies getting some support as it would imply that economic activity expanded at faster rates in the respective sectors of each economy and vice versa. Also Australia’s CPI rates are eyed by Aussie traders as it would be another piece of the puzzle for Australia’s economy before RBA’s interest rate decision next week. Should inflationary pressures in the Australian economy be on the rise, AUD could get some support as it would add more pressure on RBA to actually tighten its monetary policy in its next meeting. As for US stockmarkets it should be noted that the rout was still ongoing on Friday as the market increasingly priced in a more aggressive monetary policy tightening by the Fed, while high profile earnings releases due out this week, could catch trader’s eye.

EUR/USD maintained a sideways motion on Friday between the 1.1370 (R1) resistance line and the 1.1300 (S1) support line. As the pair’s price action broke the downward trendline guiding it we switch our bearish outlook in favour of a bias for a sideways motion. Please note though that he RSI indicator below our 4-hour chart is between the readings of 30 and 50 and could be implying some slight bearish sentiment of the market for the pair. Should the selling interest be renewed, we may see the pair breaking the 1.1300 (S1) support line and aim for the 1.1235 (S2) level. Should the buyers have the upper hand, we may see EUR/USD breaking the 1.1370 (R1) resistance line and aim for the 1.1435 (R2) level.

AUD/USD dropped below the 0.7170 (R1) support line, now turned to resistance. Given that the RSI indicator below our 4-hour chart is below the reading of 50 and actively aiming for the reading of 30, we may the bearish tendencies continuing in the coming sessions. Should the bears actually maintain control over the pair’s direction we may see AUD/USD breaking the 0.7100 (S1) support line with 0.7050 (S2) level being the next possible target for the bears. Should on the other hand, the bulls say enough is enough and take over, we may see the pair reversing course, breaking the 0.7170 (R1) line and aim for the 0.7230 (R2) level.

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On Tuesday the 25, we note the release of Germany’s Ifo indicators for January, UK’s CBI industrial trends for January, the US consumer confidence for January and New Zealand’s trade data for December. On Wednesday the 26 on the monetary front we highlight the release of the Fed’s interest rate decision as well as BoC’s interest rate decision while we also note the release of New Zealand’s CPI metrics for Q4. On Thursday the 27 of January we get from Germany the forward looking GfK Consumer Sentiment for February, UK’s January distributive trades indicator, and from the US the December’s durable goods orders growth rate, the weekly initial jobless claims figure and we highlight as the main release the GDP advance rate for Q4. On Friday the 28 of January we get from Japan Tokyo’s CPI rates for January and from the US December’s consumption rate and the final University of Michigan consumer sentiment reading for January.

EUR/USD 4시간 차트