Daily Market Review – 10/02/2016
The British pound strengthened somewhat against the US dollar during yesterday’s session, after three consecutive days of declines. This trend was caused by the situation in the stock markets and changes in risk appetite. Let us remember that in recent years the British pound experienced downward trends in a wide range of markets due to the ongoing fall in oil prices. In addition, the possibility of the UK leaving the European Union puts pressure on the pound. However, today the dynamics of pair will depend largely on the publication of data on the U.K. Industrial Production at 09:30 (GMT). Also, market participants will pay attention to US Fed Chair Janet Yellen’s statements, scheduled for 15:00 (GMT) today and tomorrow. These presentations will focus on the economic outlook and recent monetary policy actions before the Joint Economic Committee. Market participants expect to hear hints of further steps to be taken by the US regulator.
Resistance: 1.4512, 1.4589, 1.4667
Support: 1.4367, 1.4250, 1.4148
The Japanese currency continues to strengthen against the US dollar, helped by demand for protective assets. In particular, yesterday such dynamics were due to the falling of US Treasury yields to the lowest level of the last year. In addition, the world’s financial problems give aid to purchases of Japanese government bonds. Investors hope that the US Federal Reserve will not rush to a further tightening of monetary policy, which began in December last year. However, the main event of the day, is the speech from Fed Chair Janet Yellen at 15:00 (GMT). In general, market participants expect that the statement of the US regulator will be restrained and will indicate some break in the pace and timing of rate hikes.
Resistance: 115.25, 116.26, 117.52
Support: 114.25, 113.40, 112.50
During yesterday’s trading day, major US stock indices showed mixed trends, but closed at the zero mark. A negative for stock markets was a drop in oil prices. In addition, yesterday’s statistics on the U.S. NFIB Small Business Optimism, which declined in January provided some pressure. This was due to the recent problems in the global economy. Nevertheless, the American small business remains optimistic about the prospects for the labor market. The attention of investors during next two days will be on the Janet Yellen’s statements. She will speak about the prospects for monetary policy pursued by the US regulator.
Resistance: 3982.85, 4045.27, 4089.96
Support: 3896.77, 3858.19, 3821.46
Light Sweet Crude Oil Futures
Quotations of “black gold” fell yesterday to a new monthly minimum of $27.74 per barrel. This trend was due to fears that the oversupply of oil on the world market will last longer than previously expected, due to weak demand growth. In addition, according to the forecasts of the International Energy Agency, oversupply will occur throughout 2016. Also, according to some reports received yesterday, oil consumption in the US and China declined sharply during January. Meanwhile, most experts aren’t hoping that the OPEC will negotiate with other oil-producing countries on the reduction of production volumes. Also, the pressure on the quotations of oil yesterday were due to inventory data from the US Institute of Petroleum, according to which they grew by 2.4 million barrels. Today, a similar report will be published by the US Department of Energy at 15:30 (GMT).
Resistance: 29.20, 30.18, 31.33
Support: 27.74, 27.00, 26.00