The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Daily News: trade war is a real threat
It’s something worth to look at!
A lot of comments from authoritative financial institutions.
- JP Morgan determines 7 key risks for the second half of 2018:
- Trade conflicts become an economically-significant trade war.
- US politics becomes even more complicated (Mueller investigation, mid-term elections).
- US core PCE inflation overshoots 2%, triggering faster Fed tightening.
- OPEC-Russia relaxation of oil accord becomes disorderly.
- Italy over eases fiscal policy and courts a funding crisis.
- US's strike-first-negotiate-later approach to diplomacy brings military entanglement in South China Sea, Korea, Iran or Syria.
- Liquidity risk turns a minor macro event into a major financial one.
Traders, take these risks into consideration as they will affect trading!
- A Barclays outlook for the second half of 2018. According to the company, the USD is supposed to rise against the euro but fall against the JPY. A year-end forecast: EUR/USD 1.12, USD/JPY 107. Emerging markets will continue weakening against the USD. USD/CNY is anticipated to end the year at 6.6, USD/INR will be at 72.
- Goldman Sachs analysts worry about trade wars. According to the bank, trade war risks are more than just talk now. Unclear messages about the further escalation of the trade issue really confuse investors and roil their sentiment.
Let’s move to daily news.
- The US dollar index is trying to recover. On Monday, it closed below $94. Up to now, it’s slightly above $94. The further direction will depend on CB consumer confidence data (17:00 MT time). The forecast is weaker than the previous data, however, if the actual one is greater than the forecast, the US dollar index will be able to continue rising. However, a great surge to previous highs at $95 isn’t anticipated.
- The EUR/USD pair couldn’t break the resistance at 1.1720 and continue the rise to the previous highs. Up to now, EUR/USD has been moving down. The support is at 1.1610. No important economic data will be released today. As a result, the further movement will depend on the USD’s strength. If the index rises, EUR/USD will go closer to the support, otherwise, it will be able to return to the resistance at 1.1720.
- USD/JPY is trading near 50.0 Fibo level that doesn’t let the pair move down. Moreover, 50-day MA (109.65) is an additional support for USD/JPY. Trade wars weigh on markets, however, the Japanese yen needs an additional support. If the USD is stronger, the pair will trade above 109.65, otherwise, it will break the support levels and will move to 109.20.
- Some news from China. The People's Bank of China cut the reference rate again. Up to now, it’s at the lowest level since January 10: 6.5180 (yesterday 6.4893). During the meeting with a group of US and European businessmen, Chinese President Xi Jinping said China will respond to US tariffs. Nothing new.
No significant changes in other pairs’ movements.
That is all for today. Follow markets’ news with us!
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.
USD’s rally takes a pause, while riskier assets are modestly rising.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.