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EURUSD: Eurozone economic confidence in January fell to 106.5 from a revised 106.6 the month prior amid economists' expectations of 106.7. At the same time, industrial confidence rose to 6.0 to mark the highest level since June 2007. Indeed, January marks the first decline in economic sentiment in 7 months, and is expected to remain under pressure in the upcoming months as governments in the bloc implement tough austerity measures in order to battle their boiling budget debt. Taking a look at the news wire overnight, ECB board member Lorenzo Bini Smaghi said that advanced economies can no longer ignore imported inflation.
Looking ahead, market participants will shift their focus to the U.S. durable goods orders for the month of December. As of late, expectations are for a 1.5 percent increase. The reading is of particular importance due to the fact that the report measures goods that are expected to last more than three years. In turn, it serves as a gauge of output to come. As the recovery in the world's largest economy remains blurry, a dismal report may add further weight onto the dollar as the currency remains under pressure.
Taking a look at price action, the EURUSD extended its two day advance; however, a turnaround may be in the horizon as daily studies are beginning to look stretched, entering into overbought levels.
Written by Michael Wright, Currency Analyst