Calm day expected ahead of ECB, BoC earnings and World Economic Forum
The US dollar strengthened during the American session on Friday. This was despite the negative economic data released during the session. Data showed that the capacity utilisation declined from 77.4% to 77.0%. The industrial production declined by -0.3%, which was worse than the expected decline of -0.2%. The JOLTs job openings were 6.8 million, which was lower than November’s 7.3 million. This was the lowest level since June 2018 and is a signal of a softening US economy.
The euro rose slightly against the USD and sterling during the Asian session. The market will today receive the December German producer price index (PPI). This measures the rise or fall of prices of products sold by manufacturers. The headline PPI is expected to have risen by 0.2% in December. In addition to the PPI, traders will start preparing for the upcoming interest rates decision by the ECB. The bank is expected to deliver an interest rates decision on Thursday. Traders will want to see whether the bank will tweak its policy statement.
The economic calendar will be fairly light today. Apart from the German PPI data, there will not be any major releases. The same is true about the earnings calendar. As such, traders will be focusing on what to expect throughout the week. There will be the World Economic Forum in Davos, where world leaders will meet. The ECB and Bank of Canada will deliver their rates decision while many companies like TD Ameritrade, Netflix, IBM, and United Airlines will release their earnings.
The EUR/USD pair rose by a few pips during the Asian session. The pair rose slightly from a low of 1.1085 to a high of 1.1095. The 1.1085 level was an important support as shown below. The price is below the 28-day exponential moving averages (EMA) and along the 14-day EMA. The price to watch will be the support of 1.1085 and whether the pair will break past this important support level.
The GBP/USD pair declined on Friday from a high of 1.3118 to a low of 1.3000. The pair dropped by a few pips to a low of 1.2995 during the Asian session. The price is below the 14-day and 28-day moving averages. The RSI has dropped from a high of 66 to a low of 33. The next level to watch will be 1.2950, which is an important support level.
The EUR/GBP pair rose slightly to a high of 0.8535, which is above the 14-day and 28-day exponential moving averages. The RSI has moved from a low of 20.71 to a high of 60. The price is above the dots of the Parabolic SAR while the price is above the important level of 100. The pair may continue moving in an upward trend today, if it does, the level to watch will be 0.8550.