Daily Market Review: February 8, 2013
YouTradeFX | Feb 08, 2013 03:09AM ET
- Retail Sales (YoY) (CH, 08:15 GMT)
- Housing Starts (Can, 13:15 GMT)
- Trade Balance + Unemployment Rate (Can, 13:30 GMT)
- Trade Balance (U.S, 13:30 GMT)
American consumers are starting to regain confidence as an improving job market eases the strain caused by a higher payroll tax. The Bloomberg Consumer Comfort Index climbed to minus 36.3 in the week ended Feb. 3, marking the first gain since the two percentage-point increase in the levy that funds Social Security took effect at the start of the year. Another report showed fewer workers filed claims for jobless benefits last week.
The Reserve Bank of Australia reduced its economic growth and inflation forecasts as investment outside the mining industry remains elusive, the labor market softens and a high local currency contains prices. “The soft outlook over the next year or so reflects a number of factors,” the RBA said in its quarterly monetary policy statement released in Sydney today.
European Central Bank President Mario Draghi has found his most effective weapon is the sound of his own voice. Draghi yesterday caused the euro’s biggest drop in seven months by suggesting its recent appreciation could damp inflation, a signal that further interest-rate cuts remain a possibility. His pledge in July to buy government bonds precipitated a sea-change in sentiment that helped to shore up the 17-nation euro area economy, yet the ECB hasn’t spent a cent so far in its so-called Outright Monetary Transactions program.
EUR/USD: The EUR/USD was trading slightly higher at 1.34067 at the time of writing on market correction and after China’s exports and imports rose more than estimated in a January that had five more working days than last year, helping sustain a growth rebound in the world’s second-biggest economy. The pair fell by nearly 200pips yesterday. The Euro suffered its biggest five-day drop in seven months after European Central Bank President Mario Draghi said recent currency gains may slow inflation and growth, damping demand for the region’s assets. In addition, the European Union leaders sparred into the night over the bloc’s next seven-year budget, with calls by U.K. Prime Minister David Cameron for spending cuts at the center of a welter of competing national demands. Spurred by an anti-EU faction at home, Cameron insisted on cuts in a proposed seven-year subsidies package of 973 billion euros ($1.3 trillion). The blueprint was trimmed once, from 1.047 trillion euros in November, and is less than the 994 billion euros spent in the budget period expiring this year. Market sentiments remain fragile on the pair. Events likely to affect the pair today are the German Trade Balance (Forecast: 14.8B – Previous: 14.6B), the French Government Budget Balance (Forecast: -97.0B – Previous: -103.4B) and the Italian Industrial Production (MoM) (Forecast: 0.3% -Previous: -1.0%). Later in the day, the U.S will release its key risk event the Trade Balance, which is forecast to come at -46.0B compare to -48.7B registered previously. The U.S will also release its Wholesale Inventories (MoM) (Forecast: 0.4% - Previous: 0.6%) and the ECRI Weekly Annualized (WoW). Prudence is recommended on the pair as market is news sensitive. The resistance level is at 1.34811 and the support level is at 1.33469.
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USD/CAD: The USD/CAD was trading in the narrow range of 0.99884 and 0.99692 at the time of writing as investors jumped on the sidelines ahead of some important economic data in Canada and the U.S. Today, Canada will release its Housing Starts, which is expected to decrease to 195.00K from 198.00K registered previously and the Unemployment Rate, which is expected to decrease to 7.0% from 7.1% recorded in the previous month. The country will also release its Trade Balance data which is expected to come at -1.0B compared to -2.0B. Later in the day, the U.S will release its key risk event the Trade Balance, which is forecast to come at -46.0B compare to -48.7B registered previously. The U.S will also release its Wholesale Inventories (MoM) (Forecast: 0.4% - Previous: 0.6%) and the ECRI Weekly Annualized (WoW). Market sentiments for risky assets remain weak after the ECB President Mario Draghi said the euro’s gains may hamper efforts to pull the currency bloc’s economy out of recession. Investors should stay cautious and wait for data to come on market to better assess the trend of the pair. The resistance level is at 1.00024 and the support level is at 0.99308.
Oil (WTI): Oil was trading slightly lower at 95.900 at the time of writing following comments from European Central Bank President Mario Draghi, while weaker-than-forecast U.S. jobs data also weighed. Trading seems a bit sticky after stronger-than-expected Chinese trade data bolstered the economic outlook for the world’s second-biggest crude user. Market sentiments are mixed ahead of some import economic data in the U.S. The country will release its key risk event the Trade Balance, which is forecast to come at -46.0B compare to -48.7B registered previously. The U.S will also release its Wholesale Inventories (MoM) (Forecast: 0.4% - Previous: 0.6%) and the ECRI Weekly Annualized (WoW). Investors should monitor all these data for visibility. The resistance level is at 97.152 and the support level is at 94.949.
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