The American dollar holds steady near a 4-week high against the Japanese yen today, after surprisingly upbeat U.S. Retail Sales numbers the previous day dampened talk of more monetary stimulus from the Federal Reserve. Later in the day, the market will get the latest reading on U.S. consumer inflation and industrial output. At this point the 79.00 resistance still looks strong and the bulls have to break through this barrier in order to change the current trend.
AUD and NZD have been under the selling pressure as forex market participants are reducing bets that the Fed will do QE3. In addition, healthy U.S. data are pushing U.S. yields higher and supporting the greenback. That creates some downward pressure for the AUD/USD and NZD/USD.
The markets view the U.S. economy as becoming more solid because the data was stronger than people expected. On the other hand investors are being cautious about the European economy. Yesterday’s report showed that Italian economy shrank 0.7%, Spain’s GDP dropped 0.4% and Portugal’s economy contracted 1.2%, indicating that economic recovery will likely remain sluggish and fragile as the ongoing recession in large parts of the periphery will continue to hold back eurozone growth. EUR/USD has been struggling to pass the 1.2400 resistance and the recent data are slowing the upward momentum.
The Asian stock markets are trading lower today as investors booked gains from recent rallies after data showing strong U.S. retail sales and Germany and France avoiding a contraction last quarter calmed sentiment. NIKKEI started the day at 8,960.28, previous close was 8,929.88. HANG SENG opened at 20,125.30, previous close was 20,291.70.
EUR/USD is trading at 1.2330 by the time of typing and for today resistances are located at 1.2366 and 1.2440. Support levels are 1.2297 and 1.2272.
GBP/USD is at 1.5672. Resistance levels are located at 1.5711 and 1.5751. Supports are located at 1.5646 and 1.5582.
USD/CHF is trading at 0.9743 by the time of typing and for today resistances are located at 0.9785 and 0.9819. Support levels are 0.9710 and 0.9675.
AUD/USD is trading at 1.0474. Resistances are located at 1.0524 and 1.0570. Support levels are 1.0448 and 1.0415.
The economic calendar is loaded today. U.K Unemployment data and MPC Meeting Minutes will be released at 09:30 GMT. U.S. Core CPI figures and Empire State Manufacturing index will be released at 13:30 GMT. U.S. Capacity Utilization Rate and Industrial Production reports will be released at 14:15 GMT.