EUR/USD – Euro Edges Lower as German Industrial Production Contracts

The euro has edged downwards on Wednesday. Currently, the pair is trading at 1.2343, down 0.27% on the day. On the release front, German Industrial Production declined 0.6%, close to the estimate of -0.7%. This marked the third decline in four months. There are no key releases out of the US. On Thursday, Germany releases Trade Balance and the US publishes unemployment claims.

It’s been a volatile week on the stock markets, with the Dow Jones posting its biggest one-day loss on Monday. The markets were back in green territory on Tuesday. A key factor in the stock market slide was strong employment numbers on Friday, as nonfarm payrolls and wage growth reports beat their estimates. Investors shied away from the stock markets, concerned that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets.

The Janet Yellen era is over at the Federal Reserve. On the weekend, Jerome Powell took over as chair, replacing Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

US Secretary of Treasury Says He is Closely Following Financial Markets

EUR/USD Fundamentals

Wednesday (February 7)

  • 2:00 German Industrial Production. Estimate -0.7%. Actual -0.6%
  • 2:45 French Trade Balance. Estimate -4.8B. Actual -3.5B
  • 4:03 Italian Retail Sales. Estimate -0.1%. Actual -0.3%
  • 5:33 German 10-year Bond Auction. Actual 0.69%
  • 6:30 EU Economic Forecasts
  • 8:30 US Crude Oil Inventories. Estimate 3.2M
  • 13:01 US 10-year Bond Auction
  • 15:00 US Consumer Credit. Estimate 19.9B
  • 17:20 US FOMC Member John Williams Speaks

Thursday (February 8)

  • 2:00 German Trade Balance. Estimate 20.4B
  • 3:45 German Buba President Weidmann Speaks
  • 8:30 US Unemployment Claims. Estimate 236K

*All release times are GMT

*Key events are in bold

EUR/USD for February 7, 2018

EUR/USD for February 7 at 635 EDT

Open: 1.2376 High: 1.2406 Low: 1.2337 Close: 1.2343

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2092 1.2200 1.2286 1.2357 1.2481 1.2569

EUR/USD ticked higher in the Asian session and is moving higher in European trade

  • 1.2357 is providing support
  • 1.2481 has some breathing room in resistance

Further levels in both directions:

  • Below: 1.2286, 1.2200, 1.2092 and 1.1961
  • Above: 1.2357, 1.2481, 1.2569 and 1.2677
  • Current range: 1.2286 to 1.2357

OANDA’s Open Positions Ratio

EUR/USD ratio is showing gains towards short positions. Currently, short positions have a majority (65%), indicative of EUR/USD continuing to move lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

US Trade Deficit Reaches 9 Year High

The U.S. trade deficit widened more than expected in December, hitting its highest level since 2008 as robust domestic demand pushed imports to a record high.

The Commerce Department said on Tuesday the trade gap increased 5.3 percent to $53.1 billion. That was the highest level since October 2008 and followed a slightly upwardly revised $50.4 billion shortfall in November.

Economists polled by Reuters had forecast the trade deficit rising to $52.0 billion in December after a previously reported $50.5 billion in the prior month. Part of the rise in the trade gap in December reflected commodity price increases.



The deficit surged 12.1 percent to $566.0 billion in 2017, the highest since 2008. The politically sensitive U.S.-China trade deficit increased 8.1 percent to a record $375.2 billion last year.

U.S. President Donald Trump has vowed to shrink the trade gap through his “America First” trade policies, which aim to shut out more unfairly traded imports and renegotiate past U.S. free trade agreements.


usdcad Canadian dollar graph, February 6, 2018

Trump has repeatedly threatened to terminate the North American Free Trade Agreement unless the pact linking Canada, Mexico and the United States can be changed to terms more favorable to Washington. And his administration has launched an investigation into China’s intellectual property practices that could lead to major new trade sanctions on Beijing.

The surge in the December trade deficit was flagged by an advanced goods trade deficit report published in late January. When adjusted for inflation, the trade deficit increased to $68.4 billion from $66.5 billion in November.

via CNBC

Gold Drops as US Stock Markets Recover

Gold has posted strong losses in the Tuesday session. In North American trade, the spot price for an ounce of gold is $1328.04, down 0.86% on the day. On the release front, JOLTS Jobs Openings slowed to 5.81 million, well off the estimate of 5.95 million.

Gold prices moved higher on Monday, following a massive sell-off on global stock markets. A key factor in the stock market slide was strong employment numbers on Friday, as nonfarm payrolls and wage growth reports beat their estimates. Investors shied away from the stock markets, concerned that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. However, US stock markets are back in green territory on Tuesday, which has stemmed the gold rally.

The Janet Yellen era is over at the Federal Reserve. On the weekend, Jerome Powell took over as chair, replacing Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

 

XAU/USD Fundamentals

Tuesday (February 6)

  • 8:30 US Trade Balance. Estimate -52.1B. Actual -53.1B
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 55.4

*All release times are GMT

*Key events are in bold

 

XAU/USD for Tuesday, February 6, 2018

XAU/USD February 6 at 12:45 EST

Open: 1339.67 High: 1346.19 Low: 1326.33 Close: 1328.04

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD edged higher in the Asian session. The pair then reversed directions and posted losses in European trade. The pair continues to lose ground in North American trade
  • 1307 is providing support
  • 1337 was tested in resistance and is a weak line
  • Current range: 1307 to 1337

Further levels in both directions:

  • Below: 1307, 1285 and 1260
  • Above: 1337, 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is showing little movement in the Tuesday session. Currently, short positions have a majority (62%), indicative of trader bias towards XAU/USD continuing to move lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

GBP/USD – Pound Drops to 2-Week Low After Global Sell-off Boosts Dollar

The British pound remains under pressure this week. In Tuesday’s North American session, GBP/USD is trading at 1.3951, down 0.15% on the day. On the release front, there are no British events on the schedule. The US trade deficit widened, climbing to $53.1 billion and missing the forecast of $52.1 billion. In the US, JOLTS Jobs Openings slowed to 5.81 million, well off the estimate of 5.95 million.

PMI indicators are important gauges of the British economy, and the January reports have all disappointed. Last week, Manufacturing and Construction PMIs slowed in January and missed their estimates. Construction PMI dropped to 50.2, pointing to stagnation in the construction sector. On Monday Services PMI continued to the trend, as the pace of expansion slowed in January. These weaker numbers across the economy are sure to trigger concerns that Brexit is taking its toll on the economy, and the pound briefly dropped below the symbolic 1.40 level earlier in the day.

It’s been a rough week for the pound, which started the week with losses. The US dollar has posted broad gains this week, after a massive sell-off on global stock markets. The sell-off can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

The Janet Yellen era is over at the Federal Reserve. On the weekend, Jerome Powell took over as chair, replacing Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

 

GBP/USD Fundamentals

Tuesday (February 6)

  • 8:30 US Trade Balance. Estimate -52.1B. Actual -53.1B
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 55.4

*All release times are GMT

*Key events are in bold

 

GBP/USD for Tuesday, February 6, 2018

GBP/USD February 6 at 11:50 EDT

Open: 1.3962 High: 1.4000 Low: 1.3836 Close: 1.3951

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3744 1.3809 1.3901 1.4010 1.4128 1.4271

GBP/USD inched higher in the Asian session. The pair posted considerable losses in European trade but has recovered in the North American session

  • 1.3901 is providing support
  • 1.4010 is the next line of resistance

Current range: 1.3901 to 1.4010

Further levels in both directions:

  • Below: 1.3901, 1.3809 and 1.3744
  • Above: 1.4010, 1.4128, 1.4271 and 1.4346

OANDA’s Open Positions Ratio

GBP/USD ratio is showing gains in short positions. Currently, short positions have a majority (62%), indicative of trader bias towards GBP/USD continuing to head lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

USD/CAD – Canadian Dollar Under Pressure as Global Stock Markets Slide

The Canadian dollar is steady in the Tuesday session, after considerable losses in the past two sessions. Currently, the pair is trading at 1.2556, up 0.16% on the day. On the release front, Canada’s trade deficit widened to C$2.3 billion, missing the estimate of C$2.3 billion. The US trade deficit also widened, climbing to $53.1 billion and missing the forecast of $52.1 billion. Later in the day, Canada releases Ivey PMI, which is forecast to improve to 60.7 points. In the US, the key event of the day is JOLTS Job Openings, which is expected to climb to 5.95 million. On Wednesday, Canada releases Building Permits.

The US dollar continues to post broad gains this week, and the Canadian dollar has declined 1.0% and is at its lowest level since mid-January. The greenback has pushed higher as global stock markets are in red territory. US stock markets started the week with strong losses, and the Dow Jones posted its biggest loss in one day on Monday, losing 1,500 points at one stage. The index ended the day down 4.6%, and the downward trend has continued in the Asian and European markets on Tuesday. As investors head for the hills, analysts are scrambling to find the reasons behind the massive sell-off in the stock markets. Some experts are pointing to the changing of the guard at the Federal Reserve, with Jerome Powell replacing outgoing chair Janet Yellen on Saturday. However, Powell is not expected to change current monetary policy, so it’s unclear how Powell would have rubbed the markets the wrong way after just one day at his new job.

A more likely explanation for the sell-off can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

USD/CAD Fundamentals

Tuesday (February 6)

  • 8:30 Canadian Trade Balance. Estimate -2.3B. Actual -3.2B
  • 8:30 US Trade Balance. Estimate -52.1B. Actual -53.1B
  • 10:00 Canadian Ivey PMI
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 55.4

Wednesday (February 7)

  • 8:30 Canadian Building Permits

*All release times are GMT

*Key events are in bold

USD/CAD for Tuesday, February 6, 2018

USD/CAD, February 6 at 8:00 EDT

Open: 1.2427 High: 1.2566 Low: 1.2398 Close: 1.2556

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2190 1.2351 1.2494 1.2630 1.2757 1.2855

USD/CAD showed little movement in the Asian session. In the European trade, the pair dropped lower but has recovered

  • 1.2494 is providing support
  • 1.2630 is the next resistance line
  • Current range: 1.2494 to 1.2630

Further levels in both directions:

  • Below: 1.2494, 1.2351, 1.2190 and 1.2060
  • Above: 1.2630, 1.2757 and 1.2855

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Tuesday session. Currently, long positions have a majority (58%), indicative of trader bias towards USD/CAD continuing to move to higher ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

CAC Slides on Global Sell-Off

The CAC index has posted sharp losses in the Tuesday session. Currently, the index is at 5141.70, down 2.70% on the day. On the release front, there are no key indicators on the schedule. France’s deficit dropped sharply to EUR 67.8 billion, down from the previous reading of EUR 84.7 billion. This marked a 6-month low. Eurozone Retail PMI dipped to 50.8 in January, down from 53.0 in December. On Wednesday, France releases Trade Balance, which is also expected to show a smaller trade deficit.

Global stock markets are seeing red, and the CAC continues to slide. The index lost 3.1% last week and has declined another 2.9% this week. US markets took a tumble on Monday, with the Dow Jones posting its biggest loss in one day – at one stage, the index was done 1500 points. The Dow fell 4.6% on Monday, and the downward trend has continued in the Asian and European markets on Tuesday. As investors head for the hills, analysts are scrambling to find the reasons behind the massive sell-off. Some experts are pointing to the changing of the guard at the Federal Reserve, with Jerome Powell replacing outgoing chair Janet Yellen on Saturday. However, Powell is not expected to change current monetary policy, so it’s unclear how Powell would have rubbed the markets the wrong way after just one day at his new job.

More likely, the stock markets woes can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

Algo Trading Blamed for Monday’s Market Crash

Dow Suffers Biggest Ever One Day Points Loss

The French private sector has started 2018 on high note, as the services sector continues to expand at a brisk pace. January’s Services PMI was strong, as the indicator edged up from 59.1 to 59.2, just shy of the estimate of 59.3 points. Business confidence remains the strongest since 2011, as businesses are optimistic about strong global economic conditions. The manufacturing sector has also showed strong expansion, boosted by global demand for French products.

 

Economic Calendar

Tuesday (February 6)

  • 2:45 French Government Budget Balance. Actual 67.8B
  • 4:10 Eurozone Retail PMI. Actual 50.8

*All release times are GMT

*Key events are in bold

 

CAC, Tuesday, February 6 at 7:20 EDT

Open: 5,118.25 High: 5,224.50 Low: 5,113.50 Close: 5141.70

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

DAX Slides as US Stock Markets See Red

The DAX index continues to lose ground this week. In the Tuesday session, the index is trading at 12,454.51, down 1.88% on the day. On the release front, German Factory Orders impressed with a gain of 3.8%, crushing the estimate of 0.6%. On Wednesday, Germany releases Industrial Production.

The DAX ended last week with losses, as a sharp decline in Deutsche Bank shares sent European stock markets lower on Friday. The DAX declined 4.2% last week, and the slide continues, as the index has shed another 2.4% this week. The Dow Jones posted its biggest loss in one day on Monday, losing 1,500 points at one stage. The index ended the day down 4.6%, and the downward trend has continued in the Asian and European markets on Tuesday. What happened? Some analysts are pointing to the changing of the guard at the Federal Reserve, with Jerome Powell replacing outgoing chair Janet Yellen on Saturday. However, Powell is not expected to change current monetary policy, so it’s unclear how Powell would have rubbed the markets the wrong way before uttering a word as head of the Fed.

More likely, the stock markets woes can be attributed to strong US nonfarm payrolls and wage growth reports, which were released on Friday. Investors fear that the sharp data could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. Adding to investors’ concerns, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

Algo Trading Blamed for Monday’s Market Crash

Dow Suffers Biggest Ever One Day Points Loss

The German economy continues to shine, despite the ongoing coalition negotiations, which have dragged on since September. A spokesman for the SPD party, which is negotiating with Angela Merkel’s conservative bloc, said on Tuesday that a deal is “90-95%” done. For her part, Merkel has said that she is willing to make painful concessions in order to form a government. Both parties have stated that they want to reach an agreement on Tuesday. If there is an announcement later in the day, the euro could move higher.

Economic Calendar

Tuesday (February 6)

  • 2:00 German Factory Orders. Estimate 0.6%. Actual 3.8%
  • 4:00 German Buba President Weidmann Speaks
  • 4:10 Eurozone Retail PMI

Wednesday (February 7)

  • 2:00 German Industrial Production. Estimate -0.4%

*All release times are GMT

*Key events are in bold

DAX, Tuesday, February 6 at 6:05 EDT

Open: 12,203.50 High: 12,483.29 Low: 12,190.19 Close: 12,451.50

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Rebounds After Monday Losses, German Factory Orders Soar

The euro has posted gains on Tuesday, after starting the week with losses. Currently, the pair is trading at 1.2407, up 0.32% on the day. On the release front, German Factory Orders impressed with a gain of 3.8%, crushing the estimate of 0.6%. In the US, the key event of the day is JOLTS Job Openings, which is expected to climb to 5.95 million. On Wednesday, Germany releases Industrial Production.

The dollar kicked off the week with gains, after global stock markets posted sharp losses on Monday. The Dow Jones posted its biggest loss in one day, losing 1,500 points at one stage. The index ended the day down 4.6%. What happened? Some analysts are pointing to the changing of the guard at the Federal Reserve, although the new chair is not expected to veer off current monetary policy. More likely, strong US nonfarm payrolls and wage growth reports could lead to higher inflation, which in turn would result in more rate hikes this year. Higher interest rates make the dollar more attractive for investors, at the expense of the stock markets. As well, there are expectations that the ECB and possibly the Bank of Japan could raise rates late in 2018, which would push up the euro and yen and weigh on the stock markets.

Jerome Powell Starts Fed Chair Position Facing High Volatility

Dow Suffers Biggest Ever One Day Points Loss

In the US, January employment numbers were sharp, propelling the dollar to broad gains on Friday, as EUR/USD lost ground. Nonfarm payrolls, which is usually a market-mover, jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. The unemployment rate held steady at 4.1% for a fourth straight month. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes. Either way, the Fed is expected to continue its monetary policy of incremental rates of 25 basis points, with the goal of not surprising the markets and preventing the robust US economy from overheating.

 

EUR/USD Fundamentals

Tuesday (February 6)

  • 2:00 German Factory Orders. Estimate 0.6%. Actual 3.8%
  • 2:45 French Government Budget Balance. Estimate -67.8B
  • 4:00 German Buba President Weidmann Speaks
  • 4:10 Eurozone Retail PMI
  • 8:30 US Trade Balance. Estimate -52.1B
  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M
  • Tentative – US IBD/TIPP Economic Optimism. Estimate 55.4

Wednesday (February 7)

  • 2:00 German Industrial Production. Estimate -0.4%

*All release times are GMT

*Key events are in bold

 

EUR/USD for February 6, 2018

EUR/USD for February 6 at 5:20 EDT

Open: 1.2367 High: 1.2435 Low: 1.2351 Close: 1.2407

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.2200 1.2286 1.2357 1.2481 1.2569 1.2677

EUR/USD ticked higher in the Asian session and is moving higher in European trade

  • 1.2357 is providing support
  • 1.2481 has some breathing room in resistance

Further levels in both directions:

  • Below: 1.2357, 1.2286, 1.2200 and 1.1961
  • Above: 1.2481, 1.2569 and 1.2677
  • Current range: 1.2357 to 1.2481

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Tuesday session. Currently, short positions have a majority (61%), indicative of EUR/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Gold Shrugs as US Services PMI Beats Expectations

Gold has posted small gains in the Monday session. In North American trade, the spot price for an ounce of gold is $1335.14, up 0.15% on the day. On the release front, the ISM Non-Manufacturing PMI climbed to 59.9, above the forecast of 56.5 points. This points to strong expansion in the services sector and marked a 3-month high. On Tuesday, the US releases JOLTS Job Openings.

On Friday, US employment numbers were strong, propelling the dollar to broad gains, including against gold, which dropped 1.2%. Nonfarm payrolls jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes.

The Janet Yellen era is over at the Federal Reserve. On the weekend, Jerome Powell took over as chair, replacing Yellen. On Friday, Yellen waxed optimistic about the economy, saying that strong growth, a red-hot labor market and increased wage growth would require the Fed to gradually raise interest rates. Powell is expected to continue to Yellen’s policies, so the markets are not expecting any dramatic shifts. However, the massive US tax cut will have a strong impact on the US economy, and the markets will be looking to the Fed for guidance. If the Fed sounds optimistic about the tax reform package, the US dollar could move higher.

 

XAU/USD Fundamentals

Monday (February 5)

  • 9:45 US Final Non-Manufacturing PMI. Estimate 53.3. Actual 53.3
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5. Actual 59.9
  • Tentative – US Loan Officer Survey

Tuesday (February 6)

  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M

*All release times are GMT

*Key events are in bold

 

XAU/USD for Monday, February 5, 2018

XAU/USD February 5 at 12:40 EST

Open: 1333.08 High: 1338.66 Low: 1329.05 Close: 1335.14

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD showed little movement in the Asian session and posted gains in European trade. In North American trade, the pair edged lower but has recovered
  • 1337 is providing support
  • 1375 is the next line of resistance
  • Current range: 1337 to 1375

Further levels in both directions:

  • Below: 1337, 1307, 1285 and 1260
  • Above: 1375, 1416 and 1433

OANDA’s Open Positions Ratio

XAU/USD ratio is unchanged in the Thursday session. Currently, short positions have a majority (59%), indicative of trader bias towards XAU/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

GBP/USD – Pound Drops as UK Services PMI Disappoints

The British pound has posted considerable losses in the Monday session. In North American trade, GBP/USD is trading at 1.4009, down 0.79% on the day. On the release front, the focus was on the services sectors. British Services PMI slowed to 53.0, missing the estimate of 53.0 points. Later in the day, the UK releases British BRC Retail Sales Monitor. In the US, Non-Manufacturing PMI climbed to 59.9, above the forecast of 56.5 points. This points to strong expansion in the services sector and marked a 3-month high. On Tuesday, the US releases JOLTS Job Openings.

PMI indicators are important gauges of the British economy, and the January reports have all disappointed. Last week, Manufacturing and Construction PMIs slowed in January and missed their estimates. Construction PMI dropped to 50.2, pointing to stagnation in the construction sector. On Monday Services PMI continued to the trend, as the pace of expansion slowed in January. These weaker numbers across the economy are sure to trigger concerns that Brexit is taking its toll on the economy, and the pound briefly dropped below the symbolic 1.40 level earlier in the day.

On Friday, US employment numbers were strong, propelling the dollar to broad gains against major currencies, including the British pound, which dropped 1.1%. Nonfarm payrolls jumped to 200 thousand, beating the estimate of 181 thousand. Wage growth remained steady at 0.3%, edging above the estimate of 0.2%. Will the strong numbers lead to additional interest rate hikes? Minneapolis Fed President Neel Kaskkari said on Friday that the Fed might need to be more aggressive if wages continued to move higher. The Fed is planning to raise rates three times in 2018, but some economists are forecasting four hikes.

GBP/USD Fundamentals

Monday (February 5)

  • 4:30 British Services PMI. Estimate 54.1. Actual 53.0
  • 9:45 US Final Non-Manufacturing PMI. Estimate 53.3. Actual 53.3
  • 10:00 US ISM Non-Manufacturing PMI. Estimate 56.5. Actual 59.9
  • Tentative – US Loan Officer Survey
  • 19:01 British BRC Retail Sales Monitor

Tuesday (February 6)

  • 10:00 US JOLTS Jobs Openings. Estimate 5.95M

*All release times are GMT

*Key events are in bold

GBP/USD for Monday, February 5, 2018

GBP/USD February 5 at 11:50 EDT

Open: 1.4100 High: 1.4151 Low: 1.3987 Close: 1.4004

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3809 1.3901 1.4010 1.4128 1.4271 1.4346

GBP/USD showed little movement in the Asian session. The pair posted considerable losses in European trade and the downward trend continues in the North American session

  • 1.4128 is providing support
  • 1.4271 is the next line of resistance

Current range: 1.4128 to 1.4271

Further levels in both directions:

  • Below: 1.4010, 1.3901, 1.3809 and 1.3744
  • Above: 1.4128, 1.4271 and 1.4346

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short positions with a majority (56%). This is indicative of trader bias towards GBP/USD reversing directions and moving upwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.