Daily Market Review — 10/02/2016
U.S. Fed Chair Yellen’s Speech – Main Event Today
The Euro continues to strengthen against the dollar, helped by increased demand for the Euro as a funding currency. Also, the dynamics of the pair are strongly influenced by the general depreciation of the US currency. Despite the mixed data on the German economy, which was presented yesterday, the pair is still in an uptrend. It is worth noting that market participants are less likely to expect a rate hike by the US Federal Reserve in March. Weakening of the US dollar also contributes to the fall in yields on US Treasury bonds, to the lowest level for the year so far. Meanwhile, today investors will pay attention to U.S. Fed Chair Jannet Yellen Testifies at 15:00 (GMT). Market participants expect that she will confirm the Fed’s wait and see attitude. Otherwise, if the US regulator does not raise rates this year, the US dollar will be under intense pressure.
Resistance: 1.1343, 1.1466, 1.1607
Support: 1.1245, 1.1148, 1.1068
The pair is in a downtrend for the second week in a row. This is mainly due to increased demand for the Japanese currency due to the recent negative trends in the financial markets. Let us remember that in cases of financial or political crisis, investors buy Japanese government bonds, which are denominated in yen, as a safe asset. On the other hand, a drop in oil prices put some pressure on British currency. The UK threatening to leave the European Union provides a negative impact on the national currency and this should stay at the forefront of any trades on GBP/JPY. Today, the dynamics of the pair may be affected by the publication of data on THE U.K. Industrial Production, which will be presented at 09:30 (GMT).
Resistance: 166.94, 168.28, 170.10
Support: 164.52, 162.71, 160.42
European stock markets fell during yesterday’s trading day once again – seventh consecutive drop. Such dynamics are caused by persistent concerns about the global economic recovery. Nevertheless, European equity prices look good for takedown, since corporate profits are growing and the ECB is carrying out a program of quantitative easing, thereby supporting the stock market in the region. Some influence comes from data on industrial production in Germany, which in December showed a decline of 1.2% against expectations of 0.4% growth. The country’s imports and exports grew to new highs, leading to a record trade surplus. Also, in the UK, general data on the trade balance also recorded a decrease in the deficit. Meanwhile, investors will closely monitor the performance of Fed Chair Janet Yellen, who will speak today at 15:00 (GMT).
Resistance: 5600.04, 5677.62, 5731.69
Support: 5536.56, 5478.86, 5412.04
The precious metal quotes showed zero dynamics during yesterday’s trading day. However, gold has risen in price to its highest level in seven months against the background of investors’ risk aversion. This is due to the fall in the stock markets, which contributes to the demand for gold as a safe asset. Meanwhile, the recent weakening of the US currency does not support the quotations of gold. It is worth noting that since the beginning of the year gold has risen in price by almost 12%, and recovered all previous year’s losses. According to analysts Goldman Sachs,in the medium term, gold may again come under pressure as the US Federal Reserve may raise rates up to three times during the year. Therefore, analysts predict the price of gold near $1,000 per ounce by the end of this year. The current dynamics of the asset will depend entirely on the situation in the stock markets. Also, special attention will be paid to the speech by Federal Reserve Chair Janet Yellen at 15:00 (GMT), she will testify about the economic outlook and recent monetary policy actions before the Joint Economic Committee.
Resistance: 1200.74, 1214.73, 1231.91
Support:1185.01, 1163.60, 1145.37