Daily Market Review — 22/01/2016
UK Retail Sales and Inflation in Canada – The Main Events Today
Yesterday the pair showed mixed trends. During the first half of the day the British currency became cheaper against the dollar on risk aversion after oil prices showed multi-year lows. The data on the US labor market, according to which the number of initial claims for unemployment benefits last week rose to 293,000 against the forecast of 278,000 influenced the market. And along with this, the dynamics of the EUR/GBP pair supported the British currency. The EUR/GBP showed a sharp decline during Mario Draghi’s speech. The current dynamics of the GBP/USD will depend entirely on the publication of data on retail sales in the UK at 09:30 (GMT). The Chicago Fed National Activity to be published at 13:30 (GMT) and the US Manufacturing PMI publishing at 14:45 (GMT), may also influence the market.
Resistance: 1.4248, 1.4353, 1.4477
Support: 1.4082, 1.4002, 1.3945
The Canadian currency demonstrates growth against US dollar for the third consecutive day. Such dynamics are caused mainly by a reduction of quotations of oil. In addition, the Bank of Canada decided to leave interest rates unchanged, and it helped to stop Canadian dollar’s falling. Meanwhile, yesterday’s recovery of oil prices helped the Canadian currency recover some lost ground against the US dollar. Today the data on retail sales and consumer price index in Canada, which is scheduled for 13:30 (GMT), may impact the pair’s dynamics. According to preliminary forecasts, experts expect some growth of these indicators, which may provide further support to the Canadian dollar.
Resistance: 1.4337, 1.4444, 1.4603
Support: 1.4225, 1.4062, 1.3925
During yesterday’s trading major US stock indices showed moderate growth, this was caused by oil prices’ growth. The ECB President Mario Draghi’s speech, also supported the market. Draghi said the extension of stimulus measures will be discussed at the next meeting, scheduled for March this year. Meanwhile, the Philadelphia Fed manufacturing index showed modest growth, which indicates the improvement of the situation in the sector in that region. The data on the US labor market also influenced the market. The current dynamics of the US stock exchanges will depend on the overall investor sentiment, which improved after reports that the Chinese government will continue to support the national economy. Also, the focus of investors is aimed at the quarterly reporting season.
Resistance: 4215.03, 4279.24, 4362.64
Support: 4123.93, 4076.00, 3986.02
Light Sweet Crude Oil Futures
Yesterday quotes of “black gold” rose significantly, returning above the level of 30 dollars per barrel. Such dynamics were caused most likely by profit-taking on short positions. The data on stocks from the US Department of Energy also influenced the dynamics of trading. Thus, according to yesterday’s presented data, the reserves increased by 3.979 million bpd. The correction in the oil market is likely to be short-lived because of statements by the Minister of Oil of Iraq that he is going to increase oil production to counter the proposal from Iran and Saudi Arabia. Meanwhile, Venezuela urges the OPEC to convene an emergency meeting before the scheduled June meeting on the stabilization of oil prices. Today the dynamics will be positive against the background of the expansion of stimulus measures by the Chinese government, which will support the economy, which is the second largest oil consumer in the world.
Resistance: 31.30, 33.34, 35.56
Support: 29.61, 27.86, 27.00