AUDUSD Australian economy is recovering steadily. The Australian currency demonstrates relative stability against the background of the neutrality of the US dollar, currently forming a local uptrend and trading around 0.7172.
Macroeconomic statistics coming from Australia indicate that the country’s economy continues to recover from the effects of the coronavirus pandemic confidently. According to the largest bank in the country, Westpac Banking Corporation, the consumer sentiment index for February may correct too –1.3% from –2.0%, and the expected inflation, according to the forecasts of the University of Melbourne, will rise to 4.6% from 4.4% month previously. Meanwhile, the index of building permits issued for January added 8.2%, which coincided with preliminary market estimates and exceeded the December increase of 2.6%. Thus, the probability that the Australian dollar will end the trading week with positive dynamics is quite high.
The situation in the currency pair may seriously change today after the publication of inflation data in the US. Investors are closely watching the dynamics of consumer prices in light of the possible start of a cycle of interest rate hikes by the US Federal Reserve in March this year. According to analysts, the figure will rise to 7.3%, surpassing the December value of 7.0%. If the forecast is implemented, the probability of a rate increase will increase significantly, locally supporting the US dollar, which has been trading almost neutral since Monday.
Support and resistance
On the global chart, the price moves within a long downtrend. Technical indicators are in the state of a sell signal, which is already ready to change to an upward one: the EMA fluctuation range on the Alligator indicator is actively narrowing, and the AO histogram forms upward bars in the sell zone.
WTI Crude Oil correction after reaching record highs
WTI Crude Oil correction after reaching record highs. Prices for WTI Crude Oil show a slight decrease, correcting after a strong growth the day before, which led to an update of record highs. Quotations continue to be supported by fears of supply disruptions, which are only intensifying as tensions grow in Eastern Europe and the Middle East.
In turn, pressure on the instrument on Wednesday was exerted by a published report from the US Department of Energy, according to which oil product inventories last week increased by 2.38M barrels to 416.19M barrels. Over the past period, the growth rate was 0.515M barrels, while the forecasts even suggested a decrease of 0.728M barrels.
Support and resistance
Bollinger Bands in D1 chart demonstrate the uptrend. The price range is narrowing, pointing at the ambiguous nature of trading in the short term. MACD histogram is slightly growing keeping a weak buy signal (located above the signal line). Stochastic is located in close proximity to its highs, which points to the risk of the overbought instruments in the ultra-short-term.
Existing long positions should be kept in the short and/or ultra-short-term until the signals from technical indicators clear up.
EURUSD World Bank expects a slowdown in the EU economy
EURUSD World Bank expects a slowdown in the EU economy. The European currency remains under pressure, and the EUR/USD pair trades unstably, correcting within a sideways trend around 1.1373.
According to the renewed January report of the World Bank, in 2022, the growth rate of the world economy will decline to 3.2% after growing by 4.1% in 2021. EU GDP growth forecast dropped from 4.4% to 4.2%, although in 2021, it climbed 5.1%. Among the main reasons for the negative dynamics, the bank calls the high degree of spread of the Omicron coronavirus strain and an increase in the growth rate of world inflation.
Data on the volume of industrial production in the EU will be published today. According to analysts, the indicator will decline to 0.6% from 3.3% a month earlier, putting additional pressure on the euro.
The USD Index declines, reaching the lower border of the global corridor at 95.500. Investors reacted negatively to the statement of the head of the US Federal Reserve Jerome Powell during a speech in Congress, who noted that high current inflation was a consequence of a disruption in supply chains that led to an imbalance in supply and demand, and this process would be regulated on its own. In these words, some experts caught the official’s reluctance to tighten monetary policy soon.
Support and resistance
On the global chart, the price moves within the local Flag trend continuation pattern, the implementation of which has not yet begun. The fluctuation range of the EMA on the Alligator indicator has narrowed almost completely, while the histogram of the AO oscillator remains close to the transition level.
The pound has halted its uptrend and a complex retracement is currently developing on the market. The first support for the bulls is the area of around 1.3760, and the first resistance is 1.3830. If it takes longer for the pullback to develop, it is expected to remain limited above the local support of 1.3720. Current sentiment remains positive, and should 1.3830 be breached, the next target for the buyers could be the area at around 1.3900.
The bears managed to enter the market after the bulls failed to overcome the resistance at 1.3309. At the time of writing, the currency pair is testing the support zone at 1.3225, and it is possible to witness a deeper sell-off if the U.S. dollar manages to gain momentum. The next more significant support for the Cable is found at 1.3170, followed by the one at 1.3117.
Morning Market Review, EUR is showing insignificant growth against USD during today’s Asian session, correcting after falling the day before. The “bullish” activity remains rather low, so the instrument is still holding near 1.1200 and its record lows since mid-summer 2020. The euro is noticeably inferior to the dollar, as investors are not sure that the European Central Bank (ECB) is ready to start tightening monetary policy, while the US Federal Reserve, judging by the comments of its representatives, is looking for an opportunity to accelerate the winding down of the current quantitative easing program (QE).
Additional pressure on the position of the euro is exerted by the worsening epidemiological situation in the region, which forces the European authorities to take extremely unpopular measures. Macroeconomic statistics released in Germany yesterday also did not add optimism to the markets. The IFO Business Climate index in November fell from 97.7 to 96.5 points, which was close to the forecasts at 96.6 points. The IFO Expectations index for the same period was revised from 95.4 to 94.2 points against the forecast of analysts at 95 points.
GBP/USD
The British pound is trading higher against the US currency during the morning session, trying to recover from a strong “bearish” rally since the end of last week, which has led to a renewal of record lows since December 2020. The growth of the instrument at the end of the week is mainly driven by technical factors, while the fundamental background changes little. Also, buying activity for the pound is affected by the markets closed in the US on the occasion of Thanksgiving Day. The day before, a large block of macroeconomic statistics was released in the US, which provided additional support to the American currency.
The number of initial jobless claims fell sharply from 270K to a new post-crisis low of 199K. Analysts had expected a decline to 260K. Personal Income of American citizens in October increased by 0.5% MoM, while Personal Expenses added 1.3% MoM. At the same time, the Durable Goods Orders suddenly decreased by 0.5% MoM (the forecast assumed an increase of 0.2% MoM), and the annualized GDP data for Q3 2021 reflected the acceleration of the economy to only 2.1% from 2.0% YoY.
NZD/USD
The New Zealand dollar is showing near-zero trading dynamics during the Asian session, consolidating around 0.6870. The “bulls” are trying to slightly recoup after a sharp decline the day before, which led to the renewal of local lows since August 23. Trading activity remains subdued today as markets in the US are closed for Thanksgiving. Nevertheless, traders have at their disposal a large block of statistics from the United States, which was published the day before.
The data managed to support the buyers of the American currency with a confident decrease in the number of Initial Jobless Claims from 270K to 199K, while the dynamics of GDP in Q3 2021 changed slightly (from 2.0% YoY to 2.1% YoY), while the statistics on Durable Goods Orders reflected a decline of 0.5% MoM, contrary to forecasts of an increase of 0.2% MoM. Some support for the New Zealand dollar is provided by statistics from New Zealand. Exports in October increased from 4.36B to 5.35B dollars. Imports for the same period accelerated from 6.57B to 6.64B dollars. The trade deficit narrowed from 2.206B to 1.286B dollars.
USD/JPY
The US dollar is trading mixed against the Japanese yen in Asia, consolidating near 115.35 and new all-time highs since March 2017. The American currency showed another growth the day before, responding to the publication of a large number of macroeconomic statistics from the United States, which, in general, confirmed the possibility of accelerating the pace of tightening of monetary policy by the US Federal Reserve.
The most striking positive moment was the decrease in the number of initial jobless claims below the next psychological level of 200K. Additional support was provided by data on the dynamics of personal income and spending of American citizens in October. Trading activity during the Asian session remains rather low as Thanksgiving is celebrated in the US today. Investors are focused on macroeconomic statistics from Japan today. The Coincident Index in September showed a decrease from 91.3 points to 88.7 points, which turned out to be better than market expectations at 87.5 points. The Leading Economic Index for the same period decreased from 101.3 to 100.9 points with the forecast of 99.7 points.
XAU/USD
Gold prices are showing weak corrective gains during the Asian session, trying to recover from a sharp decline earlier this week, which led to the renewal of local lows from November 4. At the moment, the instrument is again testing 1800.00 for a breakout; however, only technical factors contribute to the growth of buying activity, while the news background changes insignificantly. The macroeconomic statistics from the United States published yesterday supported investor confidence that the US Fed will probably try to reconsider the pace of monetary tightening, which will ultimately lead to a more rapid increase in interest rates.
The uptrend for EUR/USD continues as the pair reached values above 1.2100 in the late hours of yesterday’s trading session. The sentiment remains positive and the pair is expected to test the next resistance level at 1.2150, with a minor correction towards the first important support at 1.2012 remaining a possibility due to the fast rate at which the euro appreciated against the dollar. During today’s session, volatility could pick up at 13:30 GMT when the U.S. initial jobless claims data will be announced.
