Busy day for the markets: FOMC, Retail Sales, UK jobs

14 December, 2016

The markets will be looking to a packed day, especially from the U.S. and the UK. While the Fed's rate decision is due at 1900 GMT, U.S. retail sales and PPI figures will be coming out earlier in the day adding to the noise. In the UK after yesterday's inflation data showed an acceleration in consumer prices, the focus turns to today's jobs report with investors looking at whether wages are also going to increase at the same pace while the UK's unemployment rate is expected to remain at an 11-year low.

EURUSD Intra-day Analysis

EURUSD (1.0635): EURUSD was flat yesterday dipping to lows, just a few pips away from 1.0600 handle. The doji pattern coming off the previous day's bullish engulfing will serve as a caution as investors remain undecided. The bias is equally balanced as a breakout above yesterday's high of 1.0666 could signal further continuation towards 1.0765 while to the downside, a daily close below yesterday's low of 1.0603 could signal near-term weakness which could send the single currency lower to test 1.0500 support. On the 4-hour chart, EURUSD has established support at 1.0533 and a decline back to this level could potentially weaken the support, opening the downside in EURUSD.

GBPUSD Intra-day Analysis

GBPUSD (1.2653): GBPUSD posted a 5-day high yesterday at 1.2728 on the monthly inflation report. Data from ONS showed that UK's headline inflation accelerated to 1.2% on a year over year basis. The British pound rallied on the data but later was seen giving up the session's gains to close the day on a bearish note. The 4-hour Stochastics is currently moving out from the oversold level, and with the lower high formed on price, GBPUSD could be seen testing the first support level at 1.2571. A break down below this level could signal further declines towards 1.2500.

USDJPY Intra-day Analysis

USDJPY (115.22): USDJPY tested 116.00 level on Friday and price has remained fairly flat above 114.00. In the overnight session, the quarterly BoJ's Tankan surveys showed a modest improvement from the third quarter's figures indicating that a weaker yen was a boost to the manufacturing and non-manufacturing sectors in the region. With the Fed's rate hike decision coming up later this evening, the yen is likely to see come under pressure. In the short term, watch for support at 113.50 which if broken on an intraday basis could signal further weakness to 10975 - 109.50 support with the possibility to extend the declines to 105.50 - 105.20.

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