Dollar And Euro Strength Dominates FX

Strength in equity markets seems to be the core trend to kick of 2013 with continued gains being seen in February..

On the back of these gains both Dollar and Euro strength continue to be seen with both the Yen and Sterling retreating rapidly, though for slightly different reasons.

Early this week the two day EuroGroup meetings will be focused on working through recent budget proposals for the Union with remarks from Draghi On Tuesday likely to likely to be keenly watched for clues as to any changes to ECD Rate decision.

Later in the week the BOJ Rate announcement is unlikely to see any fundamental change, with a continued push forward with aggressive monetary easing policy likley to see further weakness in the Yen.

The G20 meetings at the end of the week into the weekend may prove a further driver for additional ‘risk on gains’ in equity markets going into next week.

Key News  This Week

  • Monday – EUR/ GBP – EuroGroup Meetings
  • Tuesday – GBP – CPI, BOE Inflation Letter, EUR – President Draghi Speaks, SNB Chairman Speaks
  • Wednesday – BOE- Inflation report, USD – Core Retail Sales, JPY – Rate
  • Thursday – JPY – BOJ Press Conference, USD – Unemployment claims
  • Friday – GBP – Retail Sales, USD – Consumer Sentiment, G20 Meetings

In Focus – USD/JPY

usdjpy 11th february market outlok

The prospect for further gains on the USD/JPY look strong. The pair will be in focus again this week with both the BOJ rate decision and G20 meetings on the agenda.

With the pair holding above moving averages and the 23.6 Fibonacci retracement level, expect further gains.

Below this level , 91.76 (38.2%) becomes support.

Currency Majors

EUR/USD – Despite the pullback at the end of last week on the pair, EURUSD remains in its recent up channel. Further gains against 13350 look likely.
USD/JPY – See above
USD/CHF – The pair closed last week under 9285, effectively losing its gains on the month. Stay neutral.
GPB/USD – The pair has fallen strongly below key support at 15700. Given the poor fundamentals look lower against rallies towards 15744.

Major Indices

DOW – Further gains were seen last week with equities continuing to perform well. Expect further gains with a break of 14000 and new highs looking odds on this week.
NASDAQ – 2720 support looks likely to hold on the NASDAQ as the Index approaches the 3000 mark. If risk on sentiment remains this week look higher towards this level.
FTSE – A test of 6300 last week saw a pullback. However the FTSE looks ready to retest this level and post a new 5 year high. CALL on a further break of 6300.

Commodities

Oil – Oil has pulled back and looks likely to retest support the top of the falling trend line at 91.74. This could precede a potential bounce.
Gold – Holding onto support, Gold has remained broadly flat in recent weeks with movements confined to the falling channel since August 2012. With the current move to ‘risk’ I would concede to looking lower in the short term.

Stocks

Big Stocks reporting earnings this week for the binary options trader to watch out for include Coca Cola and Barclays PLC (Tuesday), Pepsi CO, Rio Tinto and Rolls Royce (Wednesday).