The British monthly GDP is announced on Friday at 09:00 MT time.
Daily news: Anticipation of the Fed's rate hike
- New Zealand trade balance for the last month was released today. The deficit came out bigger, than it was expected (-1484 million NZD vs -930 million NZD). However, it did not have major effect on the qiwi. The level of business confidence published today has risen from -50.3 to -38.3. This is still not very positive data, but it increased from a 10-year low. That is why it resulted in NZD/USD gains today, trading near the 50-day MA at 0.6662. The next resistance is at 0.6737. Any negative news will bring the price downwards to the support at 0.6576.
- Probably one of the most important news for this week is the meeting of the US Federal open market committee (FOMC) and the announcement of the interest rate, which are scheduled today at 21:00 MT time. Major analysts expect the Federal Reserve (Fed) to hike interest rates to 2.25% - the highest rate in more than 10 years. This is explained by the stable growth, rise of wages and low levels of unemployment and core inflation. Trump has been criticizing the increasing rates since July, seeing these monetary policy decisions unnecessary. After the FOMC meeting chairman of the Fed Jerome Powell will discuss an economic outlook of the country and political pressures from the president. Right now the USD index is bearish, trading near its July’s lows at 93.6.
EUR/USD remains bullish targeting the resistance at 1.1830. FOMC meeting can change situation to opposite. In that case, the support to follow is at 1.1644.
- In other news for the USD, the level of crude oil inventories will be released today. It is forecasted that the level of crude oil continues to decline (-0.7 million vs -2.1 million). This can support the rise of the oil’s prices for today. In addition, some analysts forecasted crude to reach $100 for a barrel in the beginning of 2019. Right now, Brent is trading at its highs near 82.00. WTI is trading near the resistance at 72.20. The next resistance is at 73.60. Otherwise, watch the support at 69.00.
- The rise of prices for crude affected the commodity-linked loonie. Today USD/CAD is trading near the support at 1.29. However, the currency keeps struggling with North American free trade agreement (NAFTA) uncertainties. Furthermore, the rate hike by Fed can make USD/CAD bulls take over the market. This means it can possibly reach the resistance at 1.31.
- French finance minister Bruno Le Maire said the Brexit deal under British prime-minister Theresa May’s conditions is unacceptable and dangerous for the EU economy. He mentioned that the changes to the economic system of the Eurozone could possibly lead to economic shock or the next financial crisis. For now bulls have crossed the 100-day MA for GBP/USD aiming towards the resistance at 1.3230. The comment made by French finance minister can affect the GBP negatively today. In that case, the support is at 1.30.
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The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
The US unemployment claims are out on Thursday at 15:30 MT time.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.