Dollar Remains the Weakest One after Mixed Economic Data
Dollar remains the weakest one and is under broad based selling pressure. Mixed economic data from the US provides little support to the greenback. Headline PPI rose 0.4% mom, 2.7% yoy in January, versus expectation of 0.4% mom, 2.5% yoy. Core PPI rose 0.4% mom, 2.2% yoy, versus expectation of 0.2% mom, 2.1% yoy. Empire state manufacturing index dropped to 13.1 in February, below expectation of 18.0. Philly Fed survey rose to 25.8, above expectation of 21.6. Initial jobless claims rose 7k to 230k in the week ended February 10. 1.2537 is a key level to watch in EUR/USD today.
EU to remove punishment clause from Brexit draft
It's reported that EU official have removed a so called "punishment clause" from a draft regarding Brexit transition arrangements. The clause is about having UK to abide by all existing rules and regulations of the EU during the transition. If such request is not respected, there would be specific sanctions. On the other hand, a number of Conservatives were angered as UK will not have any say on new results approved during the period. It's believed that the requirements would be replaced by less tough-sounding languages.
From Eurozone, trade surplus widened to EUR 23.8b in December.
Government to submit BoJ Governor nomination tomorrow
In Japan, it's reported that the government is finally going to submit the nominations for the next BoJ Governor and Deputies tomorrow. Haruhiko Kuroda remains the front runner to get a rare second term as BoJ Governor. BOJ Executive Director Masayoshi Amamiya, could succeed Hiroshi Nakaso as Deputy. That should give enough time for both House to approve the appointment, before Kuroda's term ends in April. The Deputies terms will end in mid-March.
From Japan machine orders dropped -11.9% mom in December. Industrial production was revised up to 2.9% mom in December
Elsewhere, Australia employment grew 16k in January, unemployment rate dropped 0.1% to 5.5%. Australia consumer inflation expectation rose 3.6% in February.
FX trading volume surged
According to a major FX settlement services provider CLS, activity in FX trading surged at the start of the year. CLS's average daily traded volume rose to USD 1.8T in January, 24% up from a year ago, and 15.6% up from December. In the four days from February 5 to 8, volume jumped a further 14% over January. The surge in volume is seen by some as the result of Dollar's down trend resumption.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.2328; (P) 1.2397 (R1) 1.2518; More….
Intraday bias in EUR/USD remains on the upside for 1.2537 high. As noted before, pull back from there should be completed at 1.2205 already. Decisive break of 1.2537 will resume larger up trend and target 100% projection of 1.0569 to 1.2091 from 1.1553 at 1.3075. In any case, for now, as long as 1.2205 support holds, outlook will remain bullish.
In the bigger picture, key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 remains intact. Hence, rise from 1.0339 medium term bottom is still seen as a corrective move for the moment. Rejection from 1.2516 will maintain long term bearish outlook and keep the case for retesting 1.0039 alive. However, sustained break of 1.2516 will carry larger bullish implication and target 61.8% retracement of 1.6039 to 1.0339 at 1.3862.
Economic Indicators Update
|23:50||JPY||Machine Orders M/M Dec||-11.90%||-2.30%||5.70%|
|00:00||AUD||Consumer Inflation Expectation Feb||3.60%||3.70%|
|00:30||AUD||Employment Change Jan||16.0K||15.2K||34.7K||33.5K|
|00:30||AUD||Unemployment Rate Jan||5.50%||5.50%||5.50%||5.60%|
|04:30||JPY||Industrial Production M/M Dec F||2.90%||2.70%||2.70%|
|10:00||EUR||Eurozone Trade Balance (EUR) Dec||23.8B||22.6B||22.5B||22.0B|
|13:30||USD||Empire State Manufacturing Feb||13.1||18||17.7|
|13:30||USD||Initial Jobless Claims (10 FEB)||230K||227k||221k||223K|
|13:30||USD||PPI M/M Jan||0.40%||0.40%||-0.10%|
|13:30||USD||PPI Y/Y Jan||2.70%||2.50%||2.60%|
|13:30||USD||PPI Core M/M Jan||0.40%||0.20%||-0.10%|
|13:30||USD||PPI Core Y/Y Jan||2.20%||2.10%||2.30%|
|13:30||USD||Philadelphia Fed Business Outlook Feb||25.8||21.6||22.2|
|14:15||USD||Industrial Production M/M Jan||0.20%||0.90%|
|14:15||USD||Capacity Utilization Jan||78.00%||77.90%|
|15:00||USD||NAHB Housing Market Index Feb||72||72|
|15:30||USD||Natural Gas Storage||-119B|
|21:00||USD||Net Long-term TIC Flows Dec||50.3B||57.5B|