Coming up Today (All Times GMT)
- USD - Weekly Jobless Claims (13:30)
- USD - Existing Home Sales & Philly Fed Manufacturing Index (15:00)
- Weekly Inventories of Natural Gas (15:30) & Crude Oil (16:00)
- NZD - Retail Sales (21:45)
During the night, China reported that GDP grew 9.8% in the 4th quarter, compared to 9.6% in the 3rd quarter. This surge in growth may convince Chinese authorities to implement further cooling measures to curb the risk of spiraling inflation. As a result, risk appetite abated slightly and supported overnight demand for the US dollar and the Japanese yen.
Yesterday, the German government raised its 2011 growth forecast from 1.8% to 2.3%, on back of favorable momentum in exports and private consumption. This helped the euro extend its gains above the $1.3500 level. However, the rally of the pair could stall if US bank earnings and employment data continue to disappoint analysts' estimates. In this context, investors will be watching today Morgan Stanley's results and weekly jobless claims to gauge risk appetite.
EURUSD Support/Resistance: 1.3360 - 1.3430 /1.3500 - 1.3540
Unemployment figures released yesterday confirmed that British businesses are still reluctant to create new jobs. Even if the claimant count fell by 4,100 in December, the unemployment rate stayed unchanged at 7.9%. Looking forward, the implementation of austerity measures could further pressure the recovery of the labor market. As such, pound sterling eased against the dollar and the euro, as investors remained on the sideline, ahead of Friday's retail sales figures.
GBPUSD Support/Resistance: 1.5840 - 1.5875 / 1.5980 - 1.6030
EURGBP Support/Resistance: 0.8390 - 0.8415 / 0.8470 - 0.8500