USD: The USD is slightly firmer to begin the week against its major G10 counterparts, hovering at session highs as we enter the US session. However, volatility has been somewhat lacking in the FX space with China away for the new year, consequently, there is little in the way of notable catalysts to drive significant price action.
GBP: The Pound is slightly softer this morning, dipping 0.2% following today’s weak construction PMI release, which missed analyst estimates. Although, support from the 200DMA (1.3042) once again curbed further losses in the currency. A firm break however, increases scope for a retest of 1.30 with EURGBP testing 0.88. Headline risk remains given the uncertainty regarding Brexit, while investors will also look to tomorrow’s Services PMI release.
EUR: No sign of a range break with sizeable option expiries and lack of FX volatility containing spot price action. Today’s worse than expected Sentix data did little to inspire a notable move in the Euro, option expiry at 1.1465 curbing upside.
JPY: Amid the continued improvement in risk sentiment, the Japanese Yen has been on the backfoot. Alongside this, wider US-JP 10yr spreads have also pushed JPY lower, with USDJPY eyeing 110.00. Given the 2bln worth of vanilla options at 110.00 it is possible that USDJPY may face some resistance.
AUD: Eyes will be on the RBA rate decision later today, in which the main focus will fall on the statement from the central bank. Given the deteriorating domestic outlook for Australia, close attention will be on whether there will be a shift in the RBA’s rate guidance. Option markets are not banking on much in the way of volatility with AUDUSD ATM O/n vols pricing in a 33pip break-even. (RBA Preview)
DailyFX Economic Calendar: – North American Releases
Four Things Traders are Reading
- “Gold & Silver Price Analysis – Overbought, USD Bounce Putting Dent in Rally” by Paul Robinson, Market Analyst
- “Crude Oil Price Hits 10-Week High, Resistance Nears” by Nick Cawley, Market Analyst
- “RBA Rate Guidance Critical to AUDUSD Outlook” by Justin McQueen, Market Analyst
- “EURUSD Price Struggles After Latest Weak Economic Release” by Nick Cawley, Market Analyst
--- Written by Justin McQueen, Market Analyst
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