ASIA session review: Matket awaits FOMC

Data released: 

07:00 GMT Germany Import Price Index (YoY) (Dec) -2.3% -2.2% 2.9% 

07:00 GMT Germany Import Price Index (MoM) (Dec) 0.0% 0.2% 0.1% 

09:30 GMT UK Gross Domestic Product (QoQ) (Q4) Preliminar 0.7% 0.7% 0.8% 

09:30 GMT UK Gross Domestic Product (YoY) (Q4) Preliminar 2.8% 2.8% 1.9% 

09:30 GMT UK Index of Services (3M/3M) (Nov) 0.8% 0.7% 0.8% 

The U.S. dollar is being supported by projections for a further trimming of central bank stimulus as the economy strengthens. The Federal Open Market Committee will reduce the U.S central bank’s monthly asset purchases, now at $75 billion, by $10 billion at each of its meetings to end the stimulus program this year, according to the median forecasts of analysts. 

EURO 

The euro weakens as there is no key EMU data. 

EUR/USD consolidates a bit lower $1.3700 after it challenged $1.3740 on Friday (initial resistance). Above resistance comes at $1.3820 (Dec 30 highs). Minor support comes at $1.3650 (recent lows), $1.3620 (Thursday’s hourly lows). Below $1.3500 losses may widen to $1.3400 (Nov 21 lows). 

POUND 

The pound declines. 

On an annual basis UK GDP rose 2.8% in Q4, up from the 1.9% increase registered the previous quarter, according to preliminary data. This result is in line with market consensus. 

Quarter-over-quarter GDP climbed 0.7% in Q4, slightly down from +0.8% in Q3, as expected. 

GBP/USD holds at $1.6590, below session highs on $1.6620. Strong resistance comes at $1.6660 (Friday’s high), extending to $1.6675/80 (channel line from Jan 10), then - at $1.6740/60. Minor support comes at $1.6470 (recent lows), below - near $1.6400. 

YEN 

The yen dropped as Asian equities snapped a three-day drop. 

The dollar rose versus the yen before the Federal Reserve begins a two-day meeting amid forecasts it will cut monthly asset purchases by $10 billion. 

The yen advanced 3.6% this year. 

USD/JPY recovers and currently holds at Y102.90 (minor resistance). Initial support comes at recent lows on Y101.90/80. Below losses may extend to Y101.10 (Nov 26 lows). Above session high acts as resistance around Y103.60. 

DATA AHEAD: 

At 13:30 GMT US Durable Goods Orders (Dec) (1.5% vs 3.5%). At 15:00 GMT US Consumer Confidence ( 78.9 vs 78.1).

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