Forex Morning Report

Euro Shows Steady Decline – Morning Forex Report

Expect a slow trading day as the US is closed for a holiday. EUR is relatively stable against USD during today’s Asian session and is located near local lows, updated at the end of last week. Last Friday, EUR showed a steady decline, despite the publication of neutral statistics on Consumer Inflation, which fully met market expectations. Consumer Price Index in the euro area in December rose by 0.3% MoM after a decline of 0.3% MoM in November. In annual terms, prices remained at the same rate of growth (+1.3% YoY). Traders almost completely ignored weak statistics from the United States. Industrial Production in the USA in December decreased by 0.3% MoM after an increase of 0.8% MoM in the previous month. Experts expected a decrease of 0.2% MoM. Michigan Consumer Sentiment Index fell slightly from 99.3 to 99.1 points in January, which turned out to be worse than neutral forecasts.


GBP is showing slight growth against USD during today’s Asian session. The instrument adds about 0.09%, testing the psychological support level of 1.3000 for a breakout. In addition to a number of technical factors, the pound is supported by the publication of data from the UK on House Prices. In January, Rightmove House Price Index showed an increase of 2.3% MoM after a decline of 0.9% MoM last month. YoY, the growth of the index accelerated from 0.8% to 2.7%. It is likely that the trading activity on the instrument at the beginning of the week will remain reduced due to the fact that US markets are closed on Monday due to the national holiday. On Tuesday, investors are waiting for the publication of UK labor market data.


AUD is showing moderate growth against USD during today’s Asian session, recovering from a sharp decline at the end of the previous week. The instrument adds about 0.14%, approaching the level of 0.6900. The growth of the pair is mainly due to technical factors. In addition, investors take a lead from weak statistics from the US on Industrial Production and Capacity Utilization, which was ignored last Friday. On January 23, traders expect the publication of the December report on the Australian labor market, but forecasts for it are still very negative. It is expected that employment growth may slow down by more than 2 times, and the Unemployment Rate will again increase from 5.2% to 5.3%.


USD shows moderate growth against JPY during today’s Asian session, continuing the development of a powerful “bullish” impulse of January 6. The instrument adds about 0.05%, testing the level of 110.20 for a breakout. Pressure on JPY is again exerted by weak macroeconomic statistics from Japan. Industrial Production in Japan in November fell by 8.2% YoY after falling by 8.1% YoY in the previous month. However, investors did not expect a significant improvement in the dynamics of the indicator. In monthly terms, the production rate decreased by 1% MoM after a decline of 0.9% MoM in October. Capacity Utilization in November fell by 0.3% after a decrease of 4.5% last month. Investors expected an increase of 0.7%.


Gold prices are relatively stable during today’s Asian session and continue developing uncertain “bullish” trend, trading near weekly highs. Good macroeconomic statistics from China, as well as the conclusion of a trade agreement between the USA and China, put significant pressure on the instrument, as well as on the demand for safe assets in general. Last Friday, China reported a 6% YoY growth in GDP for the Q4 2019, which fully met market expectations. Meanwhile, Industrial Production in December grew by 6.9% YoY, accelerating from the previous value of 6.2% YoY. Analysts expected a slowdown in production growth to 5.9% YoY.

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