Markets in Details: 25 January 2019

25 January, 2019

News

  • The ECB decided to keep rates unchanged and said it expects rates to stay near current levels at least until the summer. The euro fell against the dollar after Mario Draghi noted growth momentum for the eurozone is expected to remain weak in the near-term due to geopolitical factors, protectionism, and vulnerabilities in EMs.
  • The U.S. labour market continues to show strength after Initial Jobless Claims show the number of unemployment benefit applications fell to the lowest level since 1969. Observers thus expect wage pressure to become a factor for the Federal Reserve to hike rates though this would likely be a decision in the second half of the year given the current trade headwinds.

The focus of attention

  • Markets are expected to react to U.S. Commerce Secretary’s comment that the U.S. is “miles and miles” away from a trade pact with China and the Senate’s decision on Thursday to reject two competing bills to end the government shutdown, which enters day-35 on Friday.

Expected events

  • All times GMT. Reports from the U.S. could be delayed or postponed due to the U.S. government shutdown.
  • 09:00 Germany will release the Ifo Business Climate Index.
  • 09:30 UK will release Gross Mortgage Approvals.
  • 13:30 U.S. will release Core Durable Goods Orders for December.
  • 15:00 U.S. will release the latest New Home Sales report.

Technical Analysis 

  • EUR USD broke through its momentum resistance at the RSI-41 level and declined past its near-term support at 1.1342. Trading on Thursday ended near session lows after the pair found support at 1.1299. Maintaining this support would be key to its next move. Therefore expect limited downside risk if the asset can maintain above this level.
  • GBP USD saw weakness for most of Thursday’s trading session but was able to find support at the 50SMA and bounced off of it to end almost flat on the day. The bullish patterns on this asset remain intact and it could test the November high at 1.3163 on Friday.


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