Daily Market Review — 14/01/2016
The Bank of England’s Decision on Interest Rates – The Main Event of the Day
During yesterday’s trading, the pair showed mixed dynamics, due to concerns about slowing global economic growth, as well as the possibility of UK leaving the European Union. The issue will be put to a referendum next spring. The news background yesterday was limited, so the pair reacted to external factors. Some influence had the publication of the Fed’s Beige Book, which has given a generally positive assessment of the US economy. Meanwhile, market participants are preparing for the announcement of the decision from the Bank of England on interest rates, which will be the main event of the day. In addition to the announcement of the decision at 12:00 (GMT), the minutes of the last meeting of the British regulator will also be published. The investors should also pay attention to the publication of data on the US labor market at 13:30 (GMT), which may also have some influence on the pair’s dynamics.
Resistance: 1,4474, 1,4604, 1,4695
Support: 1,4351, 1,4268, 1,4181
During yesterday’s trading the pair came under pressure due to worries about slowing global economic growth triggered by the situation in China. On this background, market participants are looking for secure assets, and the Japanese currency is one of such assets. On the other hand, the Australian dollar is suffering from reduced commodity exports to China, which is the main source of the Australian budget’s income. However, today the dynamics of pair have been influenced by labor market data in Australia. Thus, according to the presented data, the unemployment rate remained at the same value – 5.8%, while the number of employed fell by 1,000 against expectations of a reduction of 12,500 people. On the other hand, some pressure on the Japanese currency was delivered by negative data on the volume of orders for the equipment, which were presented this morning. Further dynamics of the pair will depend on the situation on global stock markets.
Resistance: 82,77, 83,57, 84,13
Support: 80,88, 80,00, 79,22
In the first half of yesterday’s trading day the major US stock markets showed a positive trend, driven by the hope of stabilizing the situation of the Chinese economy, especially after the publication of positive statistics of its trade balance. However, during the second half of the session, stocks have moved in the other direction. The dynamics of trading were influenced by statements by representatives of the US Federal Reserve. Mr. Rosengren said that the rate of increase in interest rates should be moderate. Meanwhile, another representative of the Federal Reserve, Mr. Kaplan, noted that he expects the tightening monetary policy to continue this year. However, the two leaders stressed that the timing and rate of increase will depend on incoming economic data. The publication of the Fed’s Beige Book, which indicated that the US economy is doing moderately well, also had an effect. Today, the dynamics of trading will be affected by the overall investor’s mood, as well as publication of data on the US labor market at 13:30 (GMT).
Resistance: 1902,44, 1927,86, 1946,43
Support: 1874,09, 1860,58, 1848,22
Light Sweet Crude Oil Futures
Oil traded near the mark of 30 dollars per barrel, where it fell in trading Tuesday. Yesterday’s sharp fluctuations of quotations for the “black gold” were caused by the publication of data on stocks of the US Department of Energy. They grew by 0.23 million barrels, while analysts expected to see a growth of 2.6 million. Also, the US Energy Information Administration said yesterday that last week a record has been set in the growth of oil production in the United States. Besides, according to their forecasts, the oversupply of oil on world markets will continue until the end of 2017. Earlier oil quotes have been supported by data on the Chinese economy, which is the second largest oil consumer after the United States. According to the data, oil imports to China rose by 9.3% in annual terms. Today, the dynamics of trading will be affected by the US currency, as well as the general trend in prices for risky assets.
Resistance: 32,08, 33,17, 34,27
Support: 29,89, 29,00, 28,50