Forex - Central Banks announce liquidity injection plan; US dollar drops
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News and Events:
The Federal Reserve, Bank of England, European Central Bank, Swiss National Bank, and the Bank of Canada have announced a joint plan to increase liquidity in the global markets by auctioning loans to major financial institutions. Under the auction system, banks will be able to discount borrow at lower rates and anonymously. The impact on the US dollar is unclear for now as both Fed and ECB predictions are rate cuts, therefore, we could actually see an appreciation in the US Dollar, especially against the Euro.
The rate cut and liquidity pact will be an attractive situation for higher-yielding currencies and carry trades. With Japan having the lowest interest rates in the developed world, investors borrowed Yen and bought higher-yielders sending the Yen into a free-fall. The dollar traded up to 112.45 against the Yen, a 1.4% increase for the day.
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Today's Key Issues (time in GMT):
09:00 EUR ECB Publishes December Monthly Report (Text)
09:00 EUR Italy CPI (NIC incl. tobacco) (MoM) (NOV F) 0.4% vs. 0.4%
09:00 EUR Italy CPI (NIC incl. tobacco) (YoY) (NOV F) 2.4% vs.2.4%
09:00 EUR Italy CPI - EU Harmonized (MoM) (NOV F) 0.3% vs.0.3%
09:00 EUR Italy CPI - EU Harmonized (YoY) (NOV F) 2.5% vs.2.5%
10:00 EUR Euro-Zone Labour Costs (YoY) (3Q) 2.6% vs.2.5%
11:00 GBP U.K. CBI Industrial Trends (DEC)
13:30 USD Producer Price Index (MoM) (NOV) 1.5% vs.0.1%
13:30 USD Producer Price Index (YoY) (NOV) 6.1% vs.6.1%
13:30 USD PPI Ex Food & Energy (MoM) (NOV) 0.2% vs.0.0%
13:30 USD PPI Ex Food & Energy (YoY) (NOV) 1.8% vs.2.5%
13:30 USD Advance Retail Sales (NOV) 0.6% vs.0.2%
13:30 USD Retail Sales Less Autos (NOV) 0.7% vs.0.2%
13:30 USD Initial Jobless Claims (DEC 8)
13:30 USD Continuing Claims (DEC 1) 2599K
13:30 CAD New Housing Price Index (MoM) (OCT) 0.3% vs. 0.3%
13:30 CAD Manufacturing Shipments (MoM) (OCT) -1.5% vs. -0.9%
13:30 CAD Labor Productivity (QoQ) (3Q) 0.1% vs. 0.2%
15:00 USD Business Inventories (OCT) 0.3% vs. 0.4%
21:45 NZD Manufacturing Activity (3Q)
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The Risk Today:
EurUsd is keeping its sights on 1.4770 as the pair remains above 1.4700. Major support holds at 1.4521.
GbpUsd support holds strong at 2.0331 and target and resistance at 2.0660. The current upward trend still shows enough momentum for that move up.
UsdJpy traders eye 112.60 and if broken, 115.00 is the next stop. Support holds firm at 111.27 and 109.72.
UsdChf may kiss the 62-day exponential moving average, currently at 1.1462. A failure to move up to 1.1629 will keep the door open for 1.0964 again.
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Resistance and Support:
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EURUSD |
GBPUSD |
USDJPY |
USDCHF |
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1.5000 K |
2.0833 S |
117.63 S |
1.1640 T |
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1.4967 S |
2.0588 M |
114.00 P |
1.1500 P |
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1.4723 M |
2.0520 M |
112.15 M |
1.1353 M |
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1.4703 |
2.0414 |
111.71 |
1.1328 |
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1.4520 M |
2.0200 S |
110.00 M |
1.1154 M |
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1.4500 K |
2.0181 M |
107.50 K |
1.1000 S |
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1.4280 S |
2.0000 K |
106.50 S |
1.0888 K |
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S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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