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Daily Report: UK Retail Sales and Canada CPI in FocusSterling will be a main focus in European session today. The pound struggled to extend gains recently as interest rate expectation flip-flops. While markets are pricing in three hikes by next year, there are concerns that a premature hike would knock down the fragile economic recovery in UK. Nevertheless, inflation did double BoE's target in January and triggered BoE Sentance to step up his hawkish rhetoric. Sentance noted yesterday his " judgment is that the upside risks to inflation are understated," and "monetary policy would most likely need to be tightened fast and by more than the markets currently expect to bring the inflation back to target." Market's focus will be on retail sales data from UK, which is expected to show 0.5% rise in January. |
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| Featured Technical Report | |
EUR/GBP Daily OutlookDaily Pivots: (S1) 0.8393; (P) 0.8419; (R1) 0.8438; More As noted before, a temporary bottom is in place at 0.8354 in EUR/GBP and intraday bias remains neutral. Nevertheless, another fall remains in favor as long as 0.8528 resistance holds and we'd still expect decline from 0.8671 to continue. Below 0.8354 will target 0.8284 support first. However, above 0.8528 will argue that fall from 0.8671 is completed and turn turn focus back to this resistance instead. |
| Special Report |
Fed Appears More Confident Over US Growth OutlookThe minutes of the January FOMC meeting unveiled that policymakers are more confident that the economic recovery would sustain and strengthened although the pace of improvement in the job market has been rather disappointing. It appeared the more hawkish members would tolerate QE2 to be carried out until expiry but they would not support additional measures. The new set of economic projections showed more upbeat forecasts on growth and employment outlooks while the prospect for inflation remained subdued. BOE Raised Inflation Forecasts, Yet Lowered Growth OutlookThe pound slumped against the US dollar and the euro as the BOE revised lower it growth forecasts despite higher inflationary outlook in the near-term. In its quarterly inflation report, the BOE unveiled the outlook that inflation will most likely fall a little below the target in the second half of 2012, but the risks relative to that most likely path are 'skewed to the upside'. Growth forecasts were revised lower as higher interest rate assumption (1%) was used and GDP growth in 4Q10 was weak. |
| Economic Indicators Update |
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Trade Idea: USD/CHF – Sell at 0.9600Yesterday's cross-inspired selloff signals the rise from 0.9329 has ended at 0.9776 earlier and the greenback has remained confined within early established broad range of 0.9301-0.9784 and further weakness to previous resistance at 0.9457 would be seen, however, near term oversold condition would limit downside to 0.9423 and reckon 0.9395/00 would hold today, bring rebound later. Trade Idea: EUR/USD – Sell at 1.3685Although the single currency has maintained a firm undertone and the near term rise from 1.3428 is likely to bring retracement of recent fall from 1.3862 to 1.3645 (50% Fibonacci retracement of 1.3862 to 1.3428), reckon 1.3693-96 (1.618 times projection of 1.3428-1.3571 measuring from 1.3462 and 61.8% Fibonacci retracement) would limit upside and bring retreat later. Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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