Daily Market Review — 04/02/2016
Bank of England Interest Rate Decision will be the main event today
The pair demonstrated mixed dynamics during yesterday’s session. In the first half of the trading day, support for British pound provided U.K. Services PMI. Thus, according to published data, the figure was 55.6, which is slightly above the average forecasts of experts − 55.3. During second half of the trading day pair’s dynamics have changed dramatically, due to negative reports on the US economy. Investors started to use the Japanese currency as a safe asset and the pair went down. The Bank of England interest rate decision to be announced at 12:00 (GMT), may seriously influence the market. At 12:45 (GMT) is scheduled Bank of England Governor Mark Carney’s speech. Most analysts do not expect any change in the current monetary policy, but the forecasts of further British economy’s development will be important for investors.
Resistance: 177.3, 175.01, 176.64
Support: 171.14, 170.12, 168.88
Recently, the Russian ruble strengthened against the US dollar. After reaching a historic high of 85 rubles per US dollar, the pair experienced a correction. Such dynamics was caused by closing of long speculative positions on the pair due to its significant growth. Most investors preferred to take profits until the moment when the Bank of Russia would require intervention at the current exchange rate policy. Yesterday, negative dynamics of pair was caused by a sharp recovery in oil prices, and the Russian currency directly depends on oil. Nevertheless, the ruble outlook remains extremely negative, and soon the pair is once again will return to growth. Meanwhile, market participants will be prepared to report on the US labor market – NFP, which will be presented this Friday.
Resistance: 76.8869, 78.3963, 80.7782
Support: 75.0238, 73.7031, 71.5570
Major European stock markets closed in the red zone yesterday, due to banks’ negative quarterly reports. Nevertheless, investors still fear a slowdown in global economic development. Yesterday, some pressure provided publication of Eurozone Services PMI. For example, in Germany and the Eurozone the data were almost the same as experts forecasted, but the rate in France pointed to the fact that the country is close to stagnation. Some support was provided by U.K. Services PMI, which was slightly above the average forecast of experts. Today, the trade’s dynamics will depend on investors’ mood, which at the moment is not entirely positive. Also, some influence could give today’s Bank of England interest rate decision.
Resistance: 8192.93, 8280.10, 8380.83
Support: 8070.89, 7983.72, 7918.05
Yesterday, the price of the precious metal rose to the highest levels in the last three months. This trend was caused by the depreciation of the US currency after the publication U.S. ISM Non-Manufacturing PMI, which appeared negative. Index was 53.5 compared to an average forecast of 55.1, indicating that the slowdown in activity in January. This situation can cause the Fed to reconsider the terms and pace of further monetary tightening. According to this, the market expects only one rate hike this year instead of four. This, in turn, will support gold. We should mention that this year the price of gold rose more than 5%, as investors have traditionally used it as a safe asset. Today, the dynamics of trade will depend on U.S. labor market’s report13:30 (GMT).
Resistance: 1145.38, 1152.10, 1158.17
Support: 1136.51, 1129.15, 1122.12