Markit’s and the Chartered Institute of Purchasing & Supply’s construction purchasing managers’ index (PMI) for the U.K. dropped to 55.0 in January from 57.8 in December, missing expectations for a decrease to 57.5. It was the lowest level since Ap…
FXStreet (Mumbai) – The GBP/JPY pair fell to a low of 172.94 on a weaker-than-expected UK data and risk-off in the equities, before recovering slightly to trade around 173.30 levels.
Hovers around hourly 50-MA
The cross is trading around the hourly 50-MA currently seen at 173.28. Sterling came under fire, while the bid tone around the safe haven JPY gathered pace as the European stocks tracked oil prices lower. The offered tone around GBP strengthened further after the UK construction PMI for Jan missed estimates.
The cross remains at the mercy of the overall market sentiment as the data calendar in the US is light.
GBP/JPY Technical Levels
The immediate resistance is seen at 173.46 (38.2% of 188.81-163.98), above which the cross could target 174.17 (Friday’s high). On the other hand, a break below 172.42 (previous day’s low) would open doors for a slide to 171.71 (hourly 100-MA).
USD/JPY: 119.00 (400m) 120.50 (232m) 121.00 (995m) 121.50 (801m), Y121.75 (200m) Y122.00 (650m) EUR/USD 1.0845-50 (EUR 303m) 1.0930 (149m) 1.1000 (226m) GBP/USD 1.4315 (GBP 236m) 1.4500 (131m) EUR/JPY 130.82 (EUR 536m) AUD/NZD 1.0880 (AUD 924m)
The Reserve Bank of Australia (RBA) kept its interest rate unchanged at 2.00% on Tuesday. This decision was expected by analysts. The RBA Governor Glenn Stevens said that the board’ decision was appropriate at this meeting. He pointed out that furthe…
FXStreet (Mumbai) – A fresh bout of buying interest is seen around the EUR/GBP cross as the cable weakened further, hit badly by the awful construction PMI data from the UK.
EUR/GBP breaks beyond 0.76 handle
Currently, the EUR/GBP pair trades 0.76% higher at 0.7601, easing off fresh session highs of 0.7617 reached few minutes ago. The pound battering extended following the release of worse-than expected UK construction PMI report, which showed that the pace of construction sector activity was the slowest in nine-months.
The Markit/CIPS construction PMI from the UK for January dropped to 55.0, from 57.8 seen in December, and stood way below estimates of 57.5.
While the bulls remain support also on the back of higher EUR/USD as the common currency continues to benefit from persisting risk-off market profile. Meanwhile, focus now remains on the Euro zone employment report due out in less than 15 minutes.
EUR/GBP Technical Levels
To the upside, the next resistance is located at 0.7626 (Feb 1 High), above which it could extend gains to 0.7700 (round number). To the downside immediate support might be located at 0.7559 (Jan 29 High) below that at 0.7522/23 (Jan 15 & 22 Low).
FXStreet (Edinburgh) – The Canadian dollar is shedding further ground vs. the greenback today, now lifting USD/CAD to fresh highs near 1.4050.
USD/CAD focused on oil
Another soft tone in crude oil prices is adding further selling pressure to CAD and thus collaborating in the pair’s upside to the mid-1.4000s, with the barrel of West Texas Intermediate slipping back below the $31.00 handle at the time of writing.
The pair is now reverting the initial negative tone seen on Monday, coming up after testing the boundaries of the key support at the 1.3900 handle on poor US releases. Ahead in the NA session, IBD/TIPP index is due ahead of the speech by Fed’s E.George.
USD/CAD significant levels
As of writing the pair is up 0.73% at 1.4034 and a surpass of 1.4225 (20-day sma) would open the door to 1.4327 (high Jan.26) and then 1.4692 (high Jan.20). On the other hand, the immediate support lines up at 1.3877 (3-month uptrend) ahead of 1.3812 (low Jan.4) and finally 1.3552 (100-day sma).
FXStreet (Mumbai) – UK construction sector experiences growth slowdown at the start of 2016. January data pointed to a renewed slowdown in output growth across the UK construction sector. Construction PMI dropped to 55.0, down from 57.8 in December. C…
The Organization of the Petroleum Exporting Countries (OPEC) delegates of Saudi Arabia, Kuwait, Qatar and the United Arab Emirates said that they were against an emergency meeting of OPEC. “We still don’t know how much oil Iran can add to the market a…
The Fed Vice Chairman Stanley Fischer said in a speech on Monday that the Fed was concerns about the developments in the global financial markets, which could have a negative impact on the U.S. economy. “Increased concern about the global outlook, par…
FXStreet (Mumbai) – The Australia Central Bank today left its rates unchanged at 2.0 per cent today and signaled the possibility of further rate cuts amid weak global economic outlook. Economic growth in China which is Australia’s major trading partner has slowed down considerably. Annual China GDP hit a 25 year low in 2015. Other emerging economies have also shown signs of slowdown. In the wake of fall in commodity prices, Australia’s terms of trade has continued to decline.
Australia is in the process of rebalancing its economy away from the resource sector. The government’s initiatives paved the way for expansion in the non-mining sectors in 2015 while the spending in mining investment continued to drop. Surveys to assess business conditions showed an improvement above average levels.
Also, employment report in recent times has shown strengthening of the labor market. Unemployment rate declined in the second half of 2015 which goes on to prove that loss of jobs in the mining sector has been made up for by hiring in other sectors. The pace of lending to businesses is also noted to have grown.
Inflation however continues to remain low. The CPI rose by 1.7 per cent over 2015 while underlying measures of inflation have stayed at about 2 per cent. The slump in commodity prices particularly oil has kept prices in check. Oil can be expected to remain low for some time now and this in turn will restrict inflation in most developed countries of the world. Also, labour costs has not grown as much as the central bank would have liked. Considering these factors analysts believe that consumer price inflation will likely continue to remain below the
RBA’s target for the next two years.
Beginning 2016, volatility in markets have grown all over again with investors jittery and apprehensive about the health of the global economy. Monetary policy makers are grappling with rate decisions and their decisions are being closely watched by markets as they wish to see an increase in liquidity . risk appetite everywhere has suffered a blow. The existent situation has led to drop in funding for emerging market sovereigns as well as lesser-rated corporates.
Monetary policy in all large economies are extremely accommodative at the moment. The RBA too walked on the same lines keeping their interest rate low at 2 per cent and signaling that their accomodative policy can be expected to continue. The RBA Board is aware that low interest rate is helping to generate demand. On the other hand regulatory measures are highlighting feasible lending standards so as to diminish risks in the housing market. House prices has moderated in Melbourne and Sydney over recent months and has mostly stayed subdued in other cities. Also, the RBA has adjusted the exchange rate in tune with evolving global outlook.
The Board is confident that the economy will continue to grow at a reasonable pace in the coming quarters. It thus decided deemed its current setting of monetary policy remained to be appropriate. However, the central bank has stressed that it will continue to monitor the financial markets and the global economic outlook to realise the threat it posed to the Australian economy. It will also examine the labor market conditions and inflation figures. The RBA has signaled low inflation will possibly provide scope for further easing.
The RBA’s decision to keep rates unchanged has upset some investors were disappointed who had believed that slump in oil prices and concerns over China’s slowdown would prompt the central bank to give out clear signals with respect to the timing of a probable next rate cut. Westpac chief economist Bill Evans is of the opinion that today’s decision is an indication that the RBA will keep rates on hold throughout 2016.
The Australia Central Bank today left its rates unchanged at 2.0 per cent today and signaled the possibility of further rate cuts amid weak global economic outlook. Economic growth in China which is Australia’s major trading partner has slowed down considerably. Annual China GDP hit a 25 year low in 2015. Other emerging economies have also shown signs of slowdown. In the wake of fall in commodity prices, Australia’s terms of trade has continued to decline.
(Market News Provided by FXstreet)