Daily Forex Brief

Friday 21st February 2014 9:13:58 am (GMT)
Daily Forex Brief
The Daily Forex Brief is written by FxPro's team in the City of London. Visit fxpro.co.uk for more news, FX commentaries, FxPro TV, real-time feeds, calculators and tools.

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Finance ministers and central bank governors of the G20 nations are meeting in Asia over the weekend at a time when monetary policy is becoming ever more crucial for FX markets. In the early part of the financial crisis, everyone seemed to be moving in the same direction, in other words rates moving down. Now, we're seeing much greater divergence, both in expectations and actual rates, which is causing more trends in currencies. The ECB has been easing and may do more next month. Expectations on the UK have shifted dramatically over the past 6 months towards earlier tightening.
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Flash Markit/HSBC PMI fell to a seven-month low of 48.3
20th February 2014 @ 02:07 GMT
Flash Markit/HSBC PMI fell to a seven-month low of 48.3 in February from January's final reading of 49....
FOMC Minutes
19th February 2014 @ 19:11 GMT
FOMC minutes show participants waiting updated guidance soon. EURUSD dropped 15 pips and now trading at 1.3740...Upcoming Webinars
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Bank of England keeps digging
12/02/14 @ 12:21 GMT by Simon Smith, Chief Economist
The Bank of England is in a hole and instead of climbing out, it has continued to dig. Recall, when forward guidance was introduced 6 months ago, there were several knock-outs, which allowed the Bank 'wiggle room' around its new 7.0% threshold level on the unemployment rate, above which rates would continue to be kept low. Six months on, with unemployment having moved close to the 7.0% level far faster than anyone anticipated, the Bank has introduced a lot more complexity to the policy outlook.

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Daily Tehnical Analysis

 Pre US Open, Daily Technical Analysis Friday, February 21, 2014

 EUR/USDGBP/USDUSD/JPYAUD/USDGOLDCRUDE OIL

 Please note that due to market volatility, some of the below sight prices may have already been reached and scenarios played out. 

 
 EUR/USD Intraday: under pressure.
 PrevNext 


  
 Pivot: 1.373Most Likely Scenario: Short positions below 1.373 with targets @ 1.369 & 1.367 in extension.Alternative scenario: Above 1.373 look for further upside with 1.3745 & 1.3775 as targets.Comment: The pair stands below its resistance as the RSI is capped by a declining trend line.  
  
 GBP/USD Intraday: key resistance at 1.6695.
 PrevNext 


  
 Pivot: 1.6695Most Likely Scenario: Short positions below 1.6695 with targets @ 1.662 & 1.66 in extension.Alternative scenario: Above 1.6695 look for further upside with 1.6735 & 1.676 as targets.Comment: The pair is rebounding and is challenging its resistance.  
  
 USD/JPY Intraday: the upside prevails.
 PrevNext 


  
 Pivot: 102Most Likely Scenario: Long positions above 102 with targets @ 102.75 & 103.05 in extension.Alternative scenario: Below 102 look for further downside with 101.65 & 101.35 as targets.Comment: The pair remains on the upside and is approaching its previous high.  
  
 AUD/USD Intraday: caution.
 PrevNext 


  
 Pivot: 0.8955Most Likely Scenario: Long positions above 0.8955 with targets @ 0.902 & 0.9045 in extension.Alternative scenario: Below 0.8955 look for further downside with 0.8925 & 0.89 as targets.Comment: the immediate trend remains up but the momentum is weak. Intraday technical indicators are mixed and call for caution.  
  
 Gold spot Intraday: bounce.
 PrevNext 


  
 Pivot: 1307Most Likely Scenario: Long positions above 1307 with targets @ 1332 & 1338 in extension.Alternative scenario: Below 1307 look for further downside with 1297 & 1286 as targets.Comment: the RSI is above its neutrality area at 50%.  
  
 Crude Oil (NYMEX) (Apr 14) Intraday: further advance.
 PrevTop 


  
 Pivot: 102Most Likely Scenario: Long positions above 102 with targets @ 103.3 & 103.9 in extension.Alternative scenario: Below 102 look for further downside with 101.3 & 100.8 as targets.Comment: the RSI lacks downward momentum.  
  
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Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by an employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without prior permission.

Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary.

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US housing starts plunge 16% as cold weather blankets country

U.S. housing starts recorded their biggest drop in almost three years in January, likely weighed down by harsh weather, but the third month of declines in permits pointed to some underlying weakness in the housing market.
The Commerce Department said on Wednesday groundbreaking tumbled 16.0 percent to a seasonally adjusted annual rate of 880,000 units, the lowest level since September. The percentage drop was the largest since February 2011.
Starts for December were revised up to a 1.05 million-unit pace from the previously reported 999,000-unit rate.
Economists polled by Reuters had expected starts to fall to a 950,000-unit rate in January
Starts in the Midwest tumbled a record 67.7 percent, suggesting unseasonably cold weather could have disrupted activity. But at the same time groundbreaking in the Northeast surged to the highest since August 2008.
Frigid temperatures have been blamed for the sharp slowdown in hiring in December and January. They also chilled manufacturing output last month and have been cited for the unexpected drop in retail sales in January.
But not all of the weakness in data can be attributed to the cold weather, amid evidence the economy was already losing momentum towards the end of the fourth quarter.
Groundbreaking for single-family homes, the largest segment of the market, fell 15.9 percent to a 573,000-unit pace in January. That was the lowest level since August 2012. Starts for the volatile multi-family homes segment dropped 16.3 percent to a 307,000-unit rate.
Permits to build homes fell 5.4 percent in January, the largest drop in since June, to a 937,000-unit pace. Permits for single-family homes slipped 1.3 percent. Multifamily sector permits declined 12.1 percent.

Producer prices stay tame

Separately, U.S. producer prices rose for a second straight month in January, pushed up by an increase in the cost of goods, but there was little sign of a broad pick-up in inflation pressures at the factory gate.
The Labor Department said its seasonally adjusted producer price index for final demand increased 0.2 percent last month, the largest increase since October.
Prices received by the nation's farms, factories and refineries had edged up 0.1 percent in December.
The renamed index has been broadened to include services and construction. It was previously known as PPI for finished goods.
PPI now covers about 72 percent of services, which along with other factors will see it likely tracking closely the Consumer Price Index with the passage of time, according to economists.
It expands coverage by including prices for personal consumption, business investment, government spending and exports.
While the revamped series only made its debut on Wednesday, the department's statistics agency, the Bureau of Labor Statistics, has been publishing the new series on an experimental basis since December 2009.
Final demand for goods rose 0.4 percent in January after rising by the same margin in December. Final demand for services increased 0.1 percent after slipping 0.1 percent in December.
In the 12 months through January, producer prices increased 1.2 percent, the largest increase since October, after advancing 1.1 percent in December.
Producer prices excluding volatile food and energy costs rose 0.2 percent after being flat the prior month.
But an even broader gauge of core producer prices - final demand less foods, energy, and trade services - nudged up 0.1 percent after rising 0.3 percent in December.
Accounting for about two-thirds of final demand, economists believe that, over time, this could become the preferred core rate measure for producer prices.
In the 12 months through January, the so-called core PPI for final demand rose 1.3 percent after increasing 1.2 percent in December.
Inflation continues to run very low because of labor market slack, which could see the Federal Reserve keeping its benchmark interest rate near zero for a while even as it dials back its monetary stimulus.
--By Reuters