Daily Insights Report 26/01/17

• 31 Mar 2017

26 Jan 2017

The President of USA went forward and fulfilled some of his pro-growth promises that were mentioned at the time of the campaign. These include, infrastructure projects, and persuading automakers to create new jobs in the country. Companies including Toyota and Ford have each already promised to create more than 500 new jobs each in the country. A similar trend may eventually follow in different industries, which the President believes has replaced American jobs, with cheaper jobs abroad.

– The yen was down 0.1% against the Dollar, after having risen 0.5% on Wednesday.

– Looking at the Dollar index (which measures the strength of the Dollar against 10 currencies) was weaker against most currencies. The currency index is looking to decline for the fifth straight week.

Commodities

– Gold was down 0.7% and reached the $1,200 per ounce level.

– Both Brent and WTI crude oil prices fell. This comes after the announcement regarding the Keystone XL and Dakota pipeline. These pipelines were given the green light to be built, and produce more shale oil. WTI fell 0.5% to reach $52.94. Brent on the other hand fell by 0.2% to reach $55.22 per barrel.

Euro (EUR)

Italy – Retail Sales.

It is likely that Italy’s retail sales fell for the month of November, after having risen in October by 1.2%. Consumer confidence did rise to 111.1 in the month of December (an increase of 3% from the month before) – however PMI data showed to have decreased. The retail sector is likely to have underperformed and the near future is also uncertain.

Germany IFO Business Climate

Believed to be the most productive economy in the Euro Zone, Germany’s business sentiment likely increased to 111.5 in the first month of the new year. With higher business confidence, Germany’s output growth rose to 1.8% for the whole year, which is the highest the country has reached since 2011. Markit PMI data also showed Germany’s manufacturing data to a 35 month high.

United States Dollar (USD)

New Home Sales

New home sales may have fallen slightly after reaching a four-month high in November. Looking at data on average, it has shown that the sales of new homes is about 20% higher than what it was a year ago. The expectation for this data is believed to be 585,000 new homes.

British Pound (GBP)

GDP Statistics

UK activity likely slowed down from 0.6% to 0.5% from the third to fourth quarter of 2016. The contribution to the growth likely came mostly from the service sector, which the data also supports. Manufacturing likely shrank, contributing to the reduction of GDP.

Technical Analysis

EURGBP

Looking at the daily chart, This currency pair is currently moving towards the 0.84 level which the chart shows to be around the 200 day SMA level. At the same time, the stochastic indicator is approaching an oversold level (20). We can see a head and shoulders pattern, which may mean that the trend may be reversed. the 0.84 level is the neckline of an visible head-and-shoulders pattern. The moving averages since December have been increasing, which may continue. In this case trading positions can be set up such that the currency pair will move towards 0.89.