Daily Market Analysis: 16 January 2017

Daily Market Analysis: 16 January 2017

by Christala Parmaxi, CFTe

 

Overview

The US Dollar closed the day lower against all of its major counterparties on Friday with the big winners of the day being the Kiwi and the Euro. The currency that was raised the least against the US Dollar was the British Pound which is affected by UK PM’s comments on Brexit. Moreover, the Pound opened Monday with a gap lower against all of its major counterparties ahead of Theresa May Brexit speech on Tuesday, with the cable reaching the level of 1.20. Despite the fact that the greenback traded lower on Friday, it did not manage to reach new low levels for the week for any of the pairs.

USD Daily Change

Weekly Economic Calendar

The economic calendar of the week ahead is quite busy with Central Banks’ monetary policy meetings, important economic data releases and significant speeches; giving a sign of high volatility to traders. Monday is a Bank Holiday for the US due to Martin Luther King Day, therefore, the US market will be closed. The major event of the day is Governor Mark Carney’s speech at 18:30 GMT at the London School of Economics.

On Tuesday, all eyes will be on the UK Prime Minister Theresa May as she delivers her Brexit speech which is expected to cause great volatility to the British Pound currency pairs. During Tuesday’s European session we are looking for the UK inflation CPI which is expected 1.4% against the latter figure of 1.2%.

On Wednesday there is more news from the United Kingdom since the Average Earning index and the Claimant Count Chang will be released and both are expected higher than the last month. Wednesday’s major events are Chair Janet Yellen speech on the monetary policy and the monetary policy meeting of the Bank of Canada. The BoC is widely expected to hold the interest rates unchanged at 0.5% and keep the monetary policy steady. During Wednesday’s US session there will be the release of the US Core CPI which is expected stable at 0.2%.

The Asian session of Thursday will reveal Australia’s employment change while the most significant event of the day will be the ECB monetary policy meeting and the interest rate decision. ECB is also expected to keep the interest rate steady at 0% and the deposit facility rate at -0.4%, however the investors are interested to hear if the Bank is ready to consider tapering of its QE program. The past month was overall positive for the EU economy since the depreciation of Euro boosted the inflation and sped up the EU growth. From the US, we are looking for housing data such as the Building Permits and for the Philadelphia Fed Manufacturing Index.

Finally, on Friday the spotlight will be on the inauguration of the President-Elect Donald Trump as the 45th President of the United States, and the investors will be looking for any comments on the future fiscal policy. Moreover, the UK monthly Retail Sales are expected to fall by 0.3% at the rate of -0.1% while the annual Core Retail Sales are expected to rise by 1%. The last but not least, the week will end with the release of Canada’s inflation and sales data.

Technical View

EURUSD

The world’s most traded currency broke SMA100 to the downside reaching a new session low level at 1.0578. MACD just shifted to negative levels with both the signal and MACD slopping downwards while RSI is slopping upwards after an unsuccessful trial to break its oversold level. Moreover, ADX indicates positive directional movement. The next short-term bearish target for the Euro is SMA200 at the support level of 1.0565 while the next valid resistance is near 1.064. The short-term overview is bearish while the medium term on the 4-hour chart is still bullish.

EURUSD

EURUSD

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