Rational FX: UK figures expected to be positive today [18/01/2011]
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Yesterday’s Market Movers
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After the release of positive Right Move House Price Index yesterday morning, we saw sterling against US dollar hike up from 1.5850 levels to 1.5954 till mid day. Sterling against euro spontaneously gained 100 pips on the back of it.
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The euro yesterday fell slightly from the one month high as the EU finance ministers are meeting in Brussels, talking about the European Union’s rescue fund.
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There was no indication from the US with markets there closed for the Martin Luther King Day holiday.
Today’s Market Movers
- In the UK calendar today, the figures are likely to be very positive. We had better than expected Nationwide Consumer Confidence and RICS House Price Balance this early morning. This is the first rise for Consumer Confidence in the 5 month. The figure is 53 which is an 8-point increase from the 21-month low at 45 in November 2010. RICS House Price Balance improved from -44% to -39%, which indicates less people are seeing housing price decreases than increases compared to the previous. This came out in line with the Right Move House Price Index yesterday. We saw GBP/USD resuming uptrend and being found above 1.59 level since the beginning of the Asian Session today.
- We will have the inflationary figure later on. Consumer Price Index MoM is expected to be increased and YoY to keep flat at 3.3%. Retail Price Index MoM is estimated to increase accord with the CPI while YoY is estimated to have a 0.1% growth as well. Core CPI YoY, however, is expected to drop 0.1%. A positive inflationary figure normally will strengthen the currency, however, given the unexpected strength of inflation in recent months, BoE faces the risk of depressing the economy by increasing the interest rate sooner than expected to control the inflation.
- ZEW Survey is due to come out at 10:00 in the morning. Both Economic Sentiment for Germany and EU are expected to be improved. ZEW Survey – Current Situation was 82.6 last month. We have no prediction for it, but it might be moving with the Economic Sentiment. This could be a stimulus factor to push Euro/USD test 1.34 levels. However, we will need to wait and see the result of the EU finance ministers’ meeting as it might affect the market more intensively.
- The only piece of data coming out from the US after the long weekend is Net Long-term TIC Flows November, increasing from $27.6B to $46.7B according to the consensus. This shows that foreign investors might have increased their demand for the US long term financial assets. If it comes out as expected, it will prove that the economy is recovering so that international capitals have been flowing into the US and support the US dollar.
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Currencies
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High
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Low
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Support
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Resistance
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GBP/EUR
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1.1997
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1.1861
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1.1890
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1.2000
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GBP/USD
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1.5984
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1.5833
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1.5900
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1.6020
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EUR/USD
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1.3424
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1.3243
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1.3360
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1.3500
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We wish you a very nice day.
