GPB Bullish, Euro Declines On Dollar, Gold Rises – Forex Morning Report

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EUR shows a slight decline against USD during today’s Asian session, developing a “bearish” momentum generated yesterday when the pair updated its local highs of January 7. The pressure is exerted by macroeconomic statistics on Retail Sales in the US for December published on Thursday. Retail Sales Ex. Autos in December grew by 0.7% MoM after zero dynamics in November. Analysts had expected growth by 0.5% MoM. Retail Control indicator in December grew by 0.5% MoM, accelerating from the previous value of –0.1% MoM. Experts predicted an increase of 0.4% MoM. During the day, investors expect the release of European statistics on consumer inflation for December.


GBP is trading near zero during today’s Asian session, testing the level of 1.3070 for a breakdown. The currency pair is prone to a slight technical correction at the end of this week after moderate growth since Tuesday, when GBP retreated from its lows of December 26. Moderate support for GBP is provided by slightly lower fears about the Bank of England interest rate cut in January. Currently, such a probability is estimated at 50%, while back on Wednesday it exceeded 60%. The meeting of the British regulator should be held on January 30, and the current interest rate is 0.75%. Today, investors are expecting the publication of statistics on Retail Sales in the UK in December. Analysts are very optimistic, so the data may well contribute to the continuation of the “bullish” trend of the instrument.


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AUD shows an uncertain decline against USD during today’s Asian session, while maintaining a flat picture in the short term. The instrument loses about 0.1% and is trying to consolidate below 0.6900. The instrument is under pressure of weak macroeconomic statistics from Australia. HIA New Home Sales in November showed a decline of 0.5% MoM, repeating the dynamics of October. Investors expected a steady increase of 5.6% MoM. Chinese data, in contrast, were optimistic. China’s GDP in Q4 2019 showed an increase of 1.5% QoQ, which coincided with market expectations. In annual terms, the Chinese economy added 6%, also justifying forecasts. Retail Sales in December grew by 8% YoY, which was better than expectations of +7.8% YoY.


USD strengthens against JPY during today’s Asian session, updating local highs of May 23. The growth of the pair is promoted by a low demand for safe assets, which has further declined after the signing of a trade agreement between the United States and China. In turn, the macroeconomic statistics from Japan provides JPY with tangible support. Quite strong data on Core Machinery Orders were released on Thursday. In November, Machinery Orders grew by 18% MoM after a decline of 6% MoM. Analysts expected growth of only 3.2% MoM. In annual terms, the indicator added 5.3% YoY after a decrease of 6.1% YoY in October, which also turned out to be much better than the forecast of –5.4% YoY.


Gold prices show a slight increase during today’s Asian session, gradually recovering from a decline the day before. The instrument adds about 0.09%, testing the level of 1555.00 for a breakout. The signing of a trade agreement between the United States and China contributed to a short-term reduction in the value of the asset; however, investors are still concerned about the rather large number of unresolved issues between the parties. Negotiations in the framework of the second phase have already begun, and so far there is no reason to believe that they will be more successful. Demand for gold is also supported by the approach of the Chinese New Year, when jewelry sales traditionally increase.

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