Currency Tech

EURUSD
R 2: 1.3800
R 1: 1.3695
CURRENT: 1.3526
S 1: 1.3444
S 2: 1.3425

USDJPY
R 2: 90.22
R 1: 89.50
CURRENT: 89.27
S 1: 88.55
S 2: 87.50

GBPUSD
R 2: 1.5580
R 1: 1.5325
CURRENT: 1.4990
S 1: 1.4780
S 2: 1.4700

AUDUSD
R 2: 0.9090
R 1: 0.9050
CURRENT: 0.8997
S 1: 0.8790
S 2: 0.8740

USDCAD
R 2: 1.0685
R 1: 1.0625
CURRENT: 1.0406
S 1: 1.0370
S 2: 1.0309<

Market Brief

  • RBA hikes cash rates 25bps to 4.0%, states joblessness looks to have peaked, inflation was consistant with target & risk in EU have decreased.
  • Australia Jan retail sales 1.2% m/m, 0.5% exp.
  •  Australia Jan bldg approvals -7.0% m/m, 0.8% exp, priv-sector houses 0.3%.
  •  Australia Q4 public spending 3.8% q/q, +2.7% exp.
  •  FSA Minister Kamei says that the BoJ should examine underwriting JGBs
  • Japan Jan unemployment 4.9%, 5.2% exp, Dec 5.2%, 540k rise in employment largest since 1973; jobs-applicants ratio 0.46, 0.47 exp, Dec 0.43.
  • Finance Minister Kan repeats want to get Japan out of deflation this year, hopes prices rise 1%+ over medium-term, need suitable monetary policy& decline in jobless rate and rise in jobs-applicants ratio is a postive sign
  • Ex-ECB Issing stated to Reuters that Greece should go to IMF, not EU

We are in line with consensus in expecting the BoC will hold rates steady at 0.25%. Despite the strong economic data, including today's Q4 GDP, which printed at 5.00%, the central bank is in no rush to unwind its accommodative position. That said, markets have been too complacent in believing the central bank's commitment to low rates means tightening is a long way off. We believe that the BoC will use the accompanying statement as an opportunity to re-align market's expectations, potentially even moving forward the date of the first hike. As the market recognizes the BoC will not sit on 0.25% forever, the pricing in of tightening should give the CAD a significant kick.

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