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Forex: EUR/USD eases after US data

The pair returned to 1.3400, as high as 1.3406, ahead of US wholesale inventories data, only to ease back and register daily losses. The EUR/USD trades at 1.3383 (-0.11%), as of writing.

Unlike what it was expected by market consensus, Wholesale Inventories in the US contracted -0.1% in December. Following a 0.6% rise in November, analysts were expecting a 0.4% rise today.

The US trade deficit was narrowed from $-48.61B to $-38.54B in December, beating market consensus of $-46.00B.
The ECB announced that LTRO repayments for February 13th will total €5B, more than the €3.2B of last week. The amount outstanding from the 1st LTRO is €343B.

"The single currency remains under pressure, as brief recovery off overnight’s low at 1.3370, failed to capitalize on a break above initial 1.3400 barrier", wrote Windsor Brokers analyst Slobodan Drvenica, adding that "fresh weakness below previous low and 50% of 1.3037/1.3710 sees risk of weekly close below 1.3400 that would confirm that the pair is in corrective phase, with immediate targets at 1.3300, Dec/Jan consolidation range top / Fib 61.8% and 1.3265, mid Jan higher platform, also close to bull trendline off 1.2660, currently at 1.3220".

WTI trading at $96.26/bbl

According to Slobodan Drvenica, an analyst at Windsor Brokers Ltd., “Crude oil’s near-term tone is negative as the price action remains capped at the 97.00 barrier (Fib 61.8% of 98.22/95.00 descent), following a rejection of the sharp recovery from the 95.00 downturn. Yesterday’s low at 95.53 (also 76.4% of 95.00/97.00 upleg) is seen as immediate support, while a break here will expose the key support at 95.00, a loss of which would extend the down wave from 97.00 towards 94.00 (it’s 100% expansion).”
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Forex Flash: RBNZ rates predicted to remain unchanged – BNZ

The recent January OCR view revealed the Reserve Bank is getting increasingly worried about excess demand in the housing market and its implications for both monetary and prudential policy. The Bank could not have been blunter when it noted house price inflation has increased and we are watching this and household credit growth closely. “In our opinion, the excesses in this market will build further. Accordingly, this will keep the central bank firmly on a tightening bias resulting in an eventual increase in the cash rate later this year.” writes the BNZ Research Team.
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