Share This Story
Forex Trading Strategies Stronger stocks and stronger rates are wind at the USD's back. Will the US GDP report add to the positive sentiment or hold the USD back?
Positive numbers from Japan with Tokyo CPI rise in January and strong Retail Sales results overnight.
MAJOR HEADLINES – PREVIOUS SESSION
• Japan Tokyo CPI (month-on-month) rose +0.5% and +0.2% less Fresh Food vs. 0.2% and 0.0% expected, respecitvely. For the year-on-year comparisons Tokyo Tokyo CPI was up +0.2% and +0.1% ex Fresh Food vs. -0.1% and 0.0% expected.
• Japan National CPI for December rose +0.2% and 0.0% ex Fresh Food vs. +0.1% and 0.0% expected. The year-on-year comparisons showed National CPI -0.1% and +0.1% ex Fresh Food, vs. -0.3% and +0.1% expected
• Japan Large Retailers' Sales were out at +0.5% in December vs. +0.3% expected
• Japan Retail Trade for December out at +0.8% vs. +0.4% expected month-on-month and +1.2% year-on-year vs. +0.6% expected
USD was mostly stronger overnight, with EUR/USD as low as 1.2193 and USD/JPY as high as 116.57
THEMES TO WATCH – UPCOMING SESSION
The recent strong move to risk willingness continues to press the USD stronger vs. the market and it looks like today's GDP report for Q4 is the last hope for the USD bearish view, as rate spread differentials strongly reversed this week and have given the USD some support. We think the expectations for a reading of +2.8% are too low - the question comes in how the market reacts to this. Has fixed income priced in too much optimism, or would an upside surprise further accelerate the developments we've seen over the last three days, with the dramatic reversal back to risk willingness after all of the risk aversion we saw developing last week and over the weekend? A tough call - and one few are willing to make out there. We also have to consider the key FOMC meeting next Tuesday. Time for a one-week option to express the view? This would also capture the Feb. 2 meeting that may see Iran being referred to the UN Security Council AND the US nonfarm Payrolls results...
NZD was lower again on new rumors of an S&P downgrade. The relief rally there was brief, indeed, as NZD/USD may zoom in on that key 0.6700 area soon.
EUR/CHF seems to be at a "pivot area" at 1.5500 ahead of today's Retail Sales data (08:15) and the KOF Swiss leading indicator (10:30) - with the January reading for the latter expected even higher than last month's 5-year high of 1.36. The SNB has proven very dovish of late despite the rate hike in December (to 1.00%) and the rhetoric has capped the rate outlook - but the consumption numbers from Switzerland have been strong even if production numbers have been less robust. If the numbers from Switzerland don't see a rally in the short-term rates, then EUR/CHF may pull higher.
Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.
Please read our full Analysis Disclosure & Disclaimer at www.saxobank.com/analysis/disclaimer.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."