Overall, the overnight session was relatively slow, despite the loaded economic release calendar. Only the yen and the swissy managed to pull some strong moves, while the rest of the majors traded near important swing points, but lacked any real momentum. Later today, Mr. Bernanke is expected to testify in front of the Senate Banking Committee, something that will definitely influence the equity and currency markets.
The Euro (Eur/Usd) advanced 70 pips during the overnight session, but the pair lacked any real momentum or volume. Currently, the euro trades very close to the 1.2750 area, an important swing point in the past. In addition, the euro trades below all the important moving averages.
The German IFO business climate fell slightly lower, to 82.6. This is the first time in the last 6 months the German business expectations has shown signs of stabilizing. The Euro-area current account was released at -7.3B, much better than analysts’ expectations. The previously released number, for the month of November, was revised lower, to -13.9B. Industrial orders tumbled in December for a fifth consecutive month. The market anticipated industrial orders would fall 4.9% in December, instead of the released number that saw orders decline by a record 5.2%
The Pound (Gbp/Usd) is trading trapped between the 20 and the 50-day simple moving averages, which has caused the pair trade almost flat overnight. Both areas are very important swing points, and with U.K. GDP scheduled for release tomorrow morning, it is possible the pair will struggle to break free until then.
The number of mortgages approved by the BBA rose by 23.4K, higher than analysts’ expectations. The previously released number, for the month of November, was revised higher, to 22.4K. In January, net mortgage lending rose by £2.9 billion, still under the average of the previous six months
The Aussie (Aud/Usd) is again struggling to break above the 20-day simple moving average as has been the case for the past few days, and has yet to succeed. The aussie will need positive equity markets and a weaker dollar in order to move higher from this point.
The Cad (Usd/Cad) has not been able to create a sustainable trend in the overnight session. In both the Asian and the European sessions, the cad has been unable to break out of the range seen during yesterday’s U.S. session. On the upside, the 1.2500 area acted as a resistance, while on the downside, the neutral pivot point (1.2470) acted as a support level.
The Swissy (Usd/Chf) traded flat in the Asian session, but started to move lower after the London open. Until now, the swissy has declined nearly 100 pips, paring the gains seen just one day earlier. Also in the overnight session, the swissy managed to break below the 20-day simple moving average.
The Swiss Consumption Indicator fell in January. The indicator declined to 0.99, showing the prospects are becoming increasingly gloomy. Due to the economic downturn, unemployment is set to rise in the coming months, which will have a negative effect on consumer spending
The Yen (Usd/Yen) gained almost 100 pips in the overnight session, helped by the positive S&P futures. However, the link between the two has been lost, to some extent, since the yen is trading near a 12-week high and the S&P has dropped to the lowest point since 1997.
The corporate services price index fell to -2.2 percent for the month as commodity prices tumbled and a deepening recession caused companies to slow spending. Advertising agencies have been especially hard hit as demand wanes. Consumer prices in Japan have fallen for the first time in more than a year this January