Daily Forex Forecast – 13 January
European equities closed mixed yesterday after the ECB and BOE released rate decisions yesterday. Both central banks kept rates steady at 1.00% and 0.50% respectively. Underlying economic health continued to improve, buoyed by the Spanish and Italian debt auctions. The Spanish sold twice the targeted “5 billion of shorter dated debt at a yield that declined 1.794% month-over-month. Italy also had a successful auction, placing the entirety of a “12 issue with yields at half the levels seen in December.
Italy is following on with a longer dated debt auction later today. The Italian MIB index responded to this positive outcome by appreciating 2.09%. The UK FTSE however, trended lower, closing down -0.15%. EURUSD also broke to the upside, climbing as high as 1.2943 before pulling back to its present level of 1.2816.
Asian markets are sitting at one-month highs as stronger European data is easing concerns that the Eurozone is entering a deep recession. The Nikkei has advanced 1.1% on improved data and positive debt auctions while the ASX is trading higher 0.32%. Strong sectors pushing markets higher include energy stocks, retail stocks, and the automotive sector.
Oil strengthened to $99.61 after falling -1.8% yesterday as growth fears turned to hope and European leaders postponed an embargo on Iranian oil for 6 months to let countries find alternatives. Copper is weaker this morning, down -1.10% which is leading AUDUSD lower -0.1742% to 1.0315.
Headline data out of the U.S. was weaker yesterday as the initial jobless claims data and continuing claims figures both disappointed investors looking for further signs of improvement in the labor market. The tech-weighted Nasdaq led indices higher, advancing 0.51%, followed by the S&P 500 up 0.23% and the Dow up 0.17%. Indices were sharply lower after the release of employment figures and disappointing retail sales but rallied towards the end of the session on stronger European economic data.
The dollar continues to weaken against most major currencies, the exceptions being the Yen and Aussie dollar.