USD
USD began to sell off at the beginning of American session and gave away all its previous gains, most likely on positive sentiment, triggered by the messages, that Greece will accept the terms for a new EU/IMF bailout and receive 130 billion euro rescue as soon as on Tuesday. As a result, the dollar slipped versus the euro and the pound and closed the session at its opening prices against the yen. US data front wasn’t rich in significant releases and covered only Conference Board employment trend index, which climbed by 0.73% in January from 105.04 to 105.81. On an annual basis the index registered +5.9% y/y, indicating ongoing recovery of American labor market. Turning to today, we expect a lot more important releases to come out of the US economy – NFIB will publish small business optimism index, anticipated with growth from 93.8 to 94.1 January. IBD/TIPP economic optimism index is expected to rise from 47.5 to 48.3 in January, consumer credits should increase by 7.5 bn dollars in December. Investors will also pay its close attention to Ben Bernanke's speech to Congressional committee on economic outlook, which may trigger increased volatility in the market today.
EUR
The euro was selling off at the beginning of the trading day yesterday until the American session, when sentiment towards the 17-nation single currency has changed abruptly positive, so that the euro not only recouped its losses but even registered a slight profit against the dollar. Today only few releases are scheduled to come in – investors will eye on French trade balance figures for the month of December, expected at -5.4 bn euros after -4.4 bn earlier, and German industrial production results – the index is likely to post +0.2% m/ growth in December after -0.6% m/m in November. These statistical data shouldn’t produce any positive or negative effect on the market as traders are now more focused on Greek debt situation, keeping an eye on Portugal as well – since the country looks to become the next “headache” for Europe after Greece.
GBP
Like the euro, the British pound slipped against the dollar at the beginning of the overnight session, but gained back its losses earlier and slightly climbed versus the dollar by the end of Monday’s trades. Today’s most important publications have been already released out of UK with BRC retail sales plunging by -0.3% y/y in January after the previous +2.2% y/y, which is a bit better than expected -0.8% y/y and probably has produced some influence on today’s trades as the pound is declining on today’s session. If nothing special happens, the pound will stay under pressure, especially now when the market expects further policy softening from the Bank of England on the upcoming interest rate decision, scheduled on Thursday.
JPY
The “bullish” attempt to continue growth on USD/JPY pair failed, most likely on the back of growing yields on the US debt market. Today’s data front covers December leading indicators, expected to have increased from 93.7 to 94.3, while market analysts anticipated 93.9. Coincident indicators should have climbed from 90.3 to 93.2, when forecasts predicted 93.1. Taking into account present uncertainty in the market, range trading is seen as the most possible scenario for the pair today.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
