There is hope and optimism on the financial markets. Yesterday, Fed Chair Powell testified before the Committee on Financial Services, as a part of a 2-day event. He stated that monetary policy is at a comfortable level, supporting economic growth and a strong labor market. The FOMC expects that over the next few months inflation will move closer to the 2% target. And the committee stated that they are closely monitoring the coronavirus outbreak but Powell refrained from speculating on the possible effects. The testimony came in shortly after the release of U.S. Johnson Redbook Index, which measures the growth in the U.S. retail sales, the release was 4.8% from 5.7% previously YoY and -0.7% from 0.2% MoM. JOLTs Job Openings for December also came in below forecast at 6.423M, below 7.000M forecast and 6.787M previous fact which was revised down from 6.800M in November.
The U.S. Dollar Index (DXY) on the 6th day of bullish rally, broke above 98.70 resistance and currently trading around 98.73, the next target up will be around 99.10.
Yesterday, ECB president Christine Lagarde had a speech during which she spoke about inflation being below target but also pointed that prolonged loose monetary policy may have a negative effect, therefore further easing is not on the table at this time. She also stated that digitalization and climate change are an important part on the Eurozone agenda.
This morning we had the release of Euro Industrial Production for December. YoY released at -4.1%, below -2.3% forecast and -1.7% previous fact. MoM -2.1%, below -1.6% and 0.2% previous fact.
The Reserve Bank of New Zealand left its interest rate unchanged at 1.0%. The statement states that the Official Cash Rate is at a comfortable level to support inflation and employment. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2% mid-point of our target range. The RBNZ assumes that the coronavirus outbreak will have a short-lived effect on the economy, with most of the impacts in the first half of 2020. NZD/USD after dropping around -5.25% since the beginning of 2020, the pair has rebounded by around +1.65% since the monetary policy and currently trading around 0.64844.
According to the official Xinhua news agency, President Xi Jinping vowed that China would meet its economic and social development goals while winning the battle against the deadly coronavirus. Today, Chinas Hubei province reported the lowest number of new virus cases this month.
EUR/USD on a Daily TF shortly dropped below 1.09, and currently trading flat around 1.09118. Technical indicators are pointing down, but after 6 consecutive days of bearish power we may be due for a correction as RSI treads into oversold area at 29.90.
Resistance: R1 1.09425, R2 1.09700, R3 1.10
Support: S1 1.09, S2 1.08580, S3 1.07775 (this target would finally close the bullish gap up from April 2017.
GBP/USD on a Daily TF is trading back above 1.29500 as support and 13EMA as resistance. We had a mixture of data from the United Kingdom yesterday. GDP for the 4Q YoY came within forecast at 0.0%, while YoY released at 1.1% above 0.8% forecast and 1.2% previous fact. Industrial Productions came below forecast at 0.1% MoM for December and Manufacturing Production came in at 0.3% below 0.5% forecast. Trade balance 0.85B ahead of -10.00B forecast.
Resistance: R1 1.30, R2 50% Fibo 1.31693, R3 1.32500
Support: S1 1.29500, S2 38.2% Fibo 1.28835, S3 200EMA 1.28395.
USD/JPY on a Daily TF tried to break above 110.00 on the positive outlook of the RBNZ but couldn’t remain and dropped back to 109.954, using 110 as resistance. Technical indicators are bullish.
Resistance: R1 110.00, R2 110.214, R3 110.680
Support: S1 109.515, S2 109.270, S3 23.6% Fibo 108.911.