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YouTradeFX Daily Market Analysis : 27/02/2013
· GfK German Consumer Climate (Ger, 07:00 GMT)
· GDP (QoQ) + Business Investment (QoQ) (GB, 09:30 GMT)
· Italian 10-Year BTP Auction ( Ita, 10:10 GMT)
· Core Durable Goods Orders (MoM) (U.S, 13:30 GMT)
· Fed Chairman Bernanke Testifies + Pending Home Sales (MoM) (U.S, 15:00 GMT)
· ECB President Draghi Speaks (EU, 17:30 GMT)
· FOMC Member Fisher Speaks (U.S, 21:30 GMT)
Federal Reserve Chairman Ben S. Bernanke defended the central bank’s unprecedented asset purchases, saying they are supporting the expansion with little risk of inflation or asset-price bubbles. “We do not see the potential costs of the increased risk- taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery,” Bernanke said yesterday in testimony to the Senate Banking Committee in Washington. “Inflation is currently subdued, and inflation expectations appear well anchored.”
European Union leaders piled pressure on Italy’s rival factions to form a unity government committed to budget rigor after a deadlocked election stirred fears of a quagmire that would re-ignite the euro debt crisis. In a message that resonated in Rome, EU President Herman Van Rompuy warned in Tallinn, Estonia, that backsliding on budget discipline and economic reforms would shatter market confidence in the 17-nation currency union’s crisis management.
Italy’s inconclusive elections raise the chance for prolonged political uncertainty, putting the country’s sovereign credit rating at risk for a downgrade, Moody’s Investors Service said. The hung parliament is credit negative because it could lead to new elections and even a second vote might not resolve the gridlock, Moody’s said in a report dated yesterday.
EUR/USD: The EUR/USD was trading flat at 1.30609 at the time of writing ahead of a series of data in the Euro area and the U.S. Today, Germany will release its Import Price Index (MoM) (Forecast: 0.3% - Previous: -0.5%) and the GfK German Consumer Climate (Forecast: 5.9 – Previous: 5.8). France will release its Consumer Confidence (Forecast: unchanged at 86). Italy will release its Business Confidence (Forecast: unchanged at 88.2) and its 10-Year BTP Auction and 5-Year BTP Auction results. In addition, the Eurozone will release the M3 Money Supply (YoY) (Forecast: 3.2% - Previous: 3.3%), the Private Loans (YoY) (Forecast: -0.6% - Previous: -0.7%), the Retail PMI, the Business and Consumer Survey (Forecast: 89.8 – Previous: 89.2) and the Consumer Confidence (Forecast: -24.0 – Previous: -23.9). The key risk event for the EUR will be the ECB President Draghi Speech. His comments may determine a short-term positive or negative trend. Later in the day, the U.S will release its Core Durable Goods Orders (MoM) (Forecast: 0.2% - Previous: 1.0%) and the Pending Home Sales (MoM) (Forecast: 1.5% - Previous: -4.3%). The key risk events for the USD will be the Fed Chairman Bernanke Testimony and the FOMC Member Fisher Speech. Market sentiments remain mixed on concerns that inconclusive Italian election results could stall or even dismantle economic reforms, which could reignite the Eurozone’s debt crisis. While the Federal Reserve Chairman Ben Bernanke downplayed worries that monetary stimulus measures in the U.S. will pump up inflation rates. Investors should remain very prudent and adopt a wait and see strategy on the pair. The resistance level is at 1.31217 and the support level is at 1.29911.
GBP/USD: The GBP/USD was trading lower at 1.50942 at the time of writing as U.K. growth concerns and the perspective of fresh easing measures by the Bank of England weighed on demand for sterling. Bank of England policy maker Paul Fisher said he favors a more prolonged period of asset purchases at a slower pace in a program that would be guided by the economic outlook. Explaining his decision to vote for 25 billion pounds ($38 billion) of additional quantitative easing this month, he said in a speech the Monetary Policy Committee should consider more bonds buying “under a slightly different dynamic approach.” Market sentiments remain weak on the GBP ahead of some important economic data in the GBP and U.S. Today, the UK will release its Business Investment (QoQ) (Forecast: 2.2% - Previous: 3.8%) and the GDP (QoQ) (Forecast: unchanged at -0.3%). A higher than expected reading should be taken as bullish for the GBP, while a lower than expected reading should be taken as bearish for the GBP. Later in the day, the U.S will release its Core Durable Goods Orders (MoM) (Forecast: 0.2% - Previous: 1.0%) and the Pending Home Sales (MoM) (Forecast: 1.5% - Previous: -4.3%). The key risk events for the USD will be the Fed Chairman Bernanke Testimony and the FOMC Member Fisher Speech. A wait and see approach is recommended on the pair. Moreover, investors should closely watch all the data in the Eurozone as well as the latest developments in Italy for more visibility. These data and news will affect market sentiments for risky assets. The resistance level is at 1.51366 and the support level is at 1.50936.
Oil (WTI): Oil was trading higher at 92.765 at the time of writing after a report showed Chinese oil imports rose in January; two data points showed U.S. demand could be improving as well. In addition, Iran met with the U.S., U.K., France, Germany, China and Russia in Almaty, Kazakhstan, for talks yesterday. The Islamic republic was offered limited sanctions relief if it ceases its output of 20 percent enriched uranium. Iran intends to present an alternative proposal today to ease some banking, petrochemical and gold sanctions. However, Investors should be prudent on the commodity as an electoral deadlock in the Italian Senate pushed prices down on fears political uncertainty may rekindle the European debt crisis. Events likely to affect the movement of the commodity are the Crude Oil Inventories (Forecast: 2.413M – Previous: 4.413M) and the Gasoline Inventories (Forecast: -0.900M – Previous: -2.884M). Moreover, market participants should closely watch all the data and news in the Eurozone, UK and U.S to get visibility on the price of oil. The resistance level is at 93.402 and the support level is at 91.498.