The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Daily News: lots of data
- More financial institutions have been worrying about trade war tensions. In Tuesday news, we told about forecasts of JP Morgan, Goldman Sachs, and Barclays. Today we will have a look at a Deutsche Bank research.
According to the Bank, the USD will be pressured in the long-term. Near-term risks seem balanced, however, over the next year, the US dollar will weaken.
The forecast for the euro is neutral as growth momentum to rebound is anticipated by the Bank, however, the ECB is supposed to be dovish.
The Japanese yen will be strong as external financial position improves, the currency will remain undervalued.
- The US dollar index rebounded from the psychological level at $94.50 and is moving down. Traders should pay attention to core durable goods orders (15:30 MT time). The forecast is weak, however, if the actual data is greater than the forecast one, the US dollar index will be able to recover. The resistance is at $94.50, the support is at $94.
- An important day for the pound. Yesterday GBP/USD couldn’t break the trendline at 1.3290 and it fell. Up to now, the pair has been trading below the support at 1.3225 (the pivot point). The further direction will depend on today’s economic events. At 11:30 MT time the Bank of England governor Mr. Carney will give a speech, later on, the Central Bank will present a financial stability report. If the report and the speech of the Bank’s governor are more hawkish, GBP/USD will be able to return to the resistance (the trendline). Otherwise, it will fall further. The next support is at 1.3140.
- The oil market will be volatile today because of the crude oil inventories data (17:30 MT time). The forecast decline is less than the previous one, however, if the actual data is less than the forecast, both oil benchmarks will be able to rise further (a decline in the number of inventories is positive for the oil market). Up to now, both oil benchmarks have been rising as the private data showed a much larger than anticipated decline. Brent has been trading near the resistance at $76.80. However, if you look at H4, you will see that 200-hour MA doesn’t let Brent rise further. If the actual data is positive for oil prices, Brent will rise further. So the next resistance will be at $78. Otherwise, it will fall to 50-day MA ($76).
WTI is moving to the resistance at $71.15. A decline in the inventories will let WTI break the resistance. Otherwise, it will turn around to $68 (50-day MA and 200-hour MA).
- A direction of the USD/CAD pair will depend on the oil market as well. Although oil is rising, the pair has been moving up. However, if the oil market rises further, the Canadian dollar will strengthen. Moreover, the Bank of Canada governor Mr. Poloz will give a speech at 22:00 MT time. Some hawkish comments on the monetary policy will support the Canadian dollar, so the pair will weaken. Otherwise, the rise will continue. The resistance is at 1.3380. The support lies at 1.3270.
That’s all for today! Follow market news with FBS!
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
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.