Market action
Today saw the USD making a bit of a comeback after the bout of weakness in the European session. The headline excuse was a marginally better than expected ADP employment change number for January. But this was hardly credible, as the more important number the ISM non-manufacturing reading for January, showed a barely expansionary reading of 50.5 vs. 51.0 expected and 50.1 in December. The New Orders component was encouraging as it was th highest in some time at 54.7, but a reading like New Export Orders at 46.0 was more than a bit depressing, as was the stubbornly low employment component at a mere 44.6. Although that is the highest number since August of 2008, due to the comparative nature of this survey, this means that all numbers below 50 mean that the situation is worsening from already very bad levels. Let's hope the recovery will push the employment level over 50 in the months to come. Until then, the unemployment rate in the US is likely to remain very high. Consider that in 2004, this employment part of the survey was registering above 55 regularly and that during the darkest days of the 2001 -03 dip in employment, the reading only fell below 45 for a handful of months, vs. the current streak of 18 months at or below that level.
Today saw the USD making a bit of a comeback after the bout of weakness in the European session. The headline excuse was a marginally better than expected ADP employment change number for January. But this was hardly credible, as the more important number the ISM non-manufacturing reading for January, showed a barely expansionary reading of 50.5 vs. 51.0 expected and 50.1 in December. The New Orders component was encouraging as it was th highest in some time at 54.7, but a reading like New Export Orders at 46.0 was more than a bit depressing, as was the stubbornly low employment component at a mere 44.6. Although that is the highest number since August of 2008, due to the comparative nature of this survey, this means that all numbers below 50 mean that the situation is worsening from already very bad levels. Let's hope the recovery will push the employment level over 50 in the months to come. Until then, the unemployment rate in the US is likely to remain very high. Consider that in 2004, this employment part of the survey was registering above 55 regularly and that during the darkest days of the 2001 -03 dip in employment, the reading only fell below 45 for a handful of months, vs. the current streak of 18 months at or below that level.
Norges Bank keeps rates steady
Norges Bank earlier today kept rates unchanged as expected, and Gjedrem and company said that the bank has been slower to hike rates than it had previously expected due to the NOK's strength since then. Gjedrem mentioned that house price inflation is high, but future interest rate hikes were not discussed. All in all this is a relatively dovish performance and some might argue that EURNOK is in danger of forming a double bottom as NOK bulls have to consider the Norges bank's response if the NOK stays strong. Any rally risks being self-defeating. USDNOK had an interesting bullish reversal today after failing to maintain altitude above the 5.90 resistance area this week. USD bulls might consider this cross for another go at the 6.00 level where the 200-day moving average resides.
Norges Bank earlier today kept rates unchanged as expected, and Gjedrem and company said that the bank has been slower to hike rates than it had previously expected due to the NOK's strength since then. Gjedrem mentioned that house price inflation is high, but future interest rate hikes were not discussed. All in all this is a relatively dovish performance and some might argue that EURNOK is in danger of forming a double bottom as NOK bulls have to consider the Norges bank's response if the NOK stays strong. Any rally risks being self-defeating. USDNOK had an interesting bullish reversal today after failing to maintain altitude above the 5.90 resistance area this week. USD bulls might consider this cross for another go at the 6.00 level where the 200-day moving average resides.
Technical Developments
EURUSD - very ugly bearish reversal today confirms the downtrend, but we have awfully big event risks in the pipeline. While a lid may be kept on the Greek situation from here on out, there are still plenty of worries in the pipeline with other fiscal and economic weaklings on the Euro periphery, with Spain especially in the spotlight at the moment. Next support of interest below recent lows is 1.3750 and then 1.3500, the former a flatline area of interest, and the latter a Fibo retracement level of interest.
EURUSD - very ugly bearish reversal today confirms the downtrend, but we have awfully big event risks in the pipeline. While a lid may be kept on the Greek situation from here on out, there are still plenty of worries in the pipeline with other fiscal and economic weaklings on the Euro periphery, with Spain especially in the spotlight at the moment. Next support of interest below recent lows is 1.3750 and then 1.3500, the former a flatline area of interest, and the latter a Fibo retracement level of interest.
JPY - no emphatic takeout today of the 90.95 resistance in USDJPY, which leaves the pair in a bit of a limbo at the moment. Likewise, EURJPY ran out of fuel ahead of 127.00. Could we be headed for a retest of the recent lows below 125? If bond bulls remain out in force the answer will be yes. Scenario is highly dependent on tomorrow's ECB and Friday's big US numbers.
GBPUSD - very bearish reversal and outside day today. A 1.5835 support break in the coming days could open up for 1000 pips more of downside, though we don't want to get ahead of ourselves here...
USDCAD - very interesting as the recent rally challenges a key resistance area and the subsequent retracement sets up somewhat of an upside down head and shoulders pattern (yes it's a messy one at best - but this 1.07-08 zone seems critical). Are we gearing up for a go at the 200-day moving average? Oil supply fundamentals are bearish, but oil prices have rallied of late...
AUDUSD - looking much shakier. Event risks just ahead tonight
Looking ahead
Australia data on tap tonight (Retail sales and Building Approvals) and both the ECB and BoE up tomorrow. The ECB will be of the most interest as the market looks at how it tackles the pressures stemming from the Greek situation and the possibility of contagion and any plans it would contemplate putting in place to prevent further trouble.
Australia data on tap tonight (Retail sales and Building Approvals) and both the ECB and BoE up tomorrow. The ECB will be of the most interest as the market looks at how it tackles the pressures stemming from the Greek situation and the possibility of contagion and any plans it would contemplate putting in place to prevent further trouble.
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