Quite a few top tier events have the euro moving on the session, which makes EUR/USD one to watch for a short-term play.
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Bund 10-YR 0.189% -0.036
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Gold: 1282.10 -0.15%
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Fresh Market Headlines & Economic data:
- Commerce Secretary Wilbur Ross: The US is ‘miles and miles’ from a trade deal with China
- U.S. weekly jobless claims lowest since 1969
- German Manufacturing PMI Sinks to 4-Year Low in January
- ECB leaves interest rates unchanged amid weak growth in the region
- Bank of England has been preparing for a hard Brexit since the leave vote, Carney says
- SNB has sufficient tools to deal with more market volatility: Jordan
- National Australia Bank raises mortgage rates, sends A$ sliding
- Australia employment stays solid, jobless rate at six-and-a-half-year lows
- Oil rises after U.S. threat of sanctions on Venezuela crude
- January U.S. Flash Manufacturing PMI at 54.9 vs. 53.8 in December
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand International Travel and Migration at 9:45 pm GMT
- Japan Core CPI y/y at 11:30 pm GMT
- German IFO Business Survey at 9:00 am GMT (Jan. 25)
What to Watch: EUR/USD
Big pickup in volatility for EUR/USD today’s thanks mainly to European events, most notably the latest purchasing managers survey data from Europe and the European Central Bank’s monetary policy statement, which is still live at the moment.
The latest PMI data was actually pretty awful with German manufacturing PMI sinking to a 4-year low in January. With continued signs of contraction in the Euro area, it’s no wonder forex traders pushed the sell button all the way to the U.S. session open.
And we got a spike lower with the release of the latest monetary policy statement from the European Central Bank, who cited rising risks to growth amid global headwinds, but EUR/USD quickly bounced higher during the press conference and is heading for session highs around the 1.1390 handle.
With leading and lagging indicators signaling weakness, and the ECB citing as much, odds are that traders will lean bearish on the euro for a bit, making the retest of the 1.1400 area one to watch for bearish reversal patterns. We may even see some bullish sentiment for the Greenback today as unemployment claims hits the lowest levels since 1969, flash manufacturing PMI ticks higher, and possibly also on today’s risk-off tilt in global sentiment.
Of course, if 1.1400 breaks and sustains trade above, a long argument can be made, but only if there is fresh catalysts pushing it. But with the current drivers of weakening Europe and positive U.S. data , it’s hard to make that case at the moment other than profit taking.