ASIA session review: Dollar pulls back ahead of Yellen’s remarks

Data released:

00:30 GMT Australia Home Loans (Dec) -1.9% -1.8% 1.4% 

00:30 GMT Australia House Price Index (QoQ) (Q4) 3.4% 3.0% 2.4% 

00:30 GMT Australia House Price Index (YoY) (Q4) 9.3% _ 8.0% 

00:30 GMT Australia National Australia Bank's Business Confidence (Jan) 8 _ 6 

The dollar fell further on Tuesday against other major currencies, as global investors awaited Janet Yellen’s first testimony as new Federal Reserve chair later in the day.

Most economists expected Yellen to signal no change in the Fed’s tapering policy and to remain cautious about revealing any new guidance in her remarks.

“If she expresses even the slightest concern about the labor market or pace of growth, the dollar will weaken as investors start to price in the possibility of lower forward guidance in March,” BK Asset Management managing director Kathy Lien said in a note on Tuesday. “If she gives off a nonchalant attitude and sounds optimistic, the dollar should rally.”

EURO

The euro rose for a fifth day versus the dollar before data this week analysts said will show U.S. retail sales stalled, damping demand for the American currency.

EUR/USD jumped up to the $1.3680 after weaker than expected Friday’s US jobs data and holds above $1.3600. Initial resistance comes at $1.3680, extebding to $1.3740 (Jan 24 highs).The initial support remains at recent lows on $1.3550 (Feb 2 lows), then - at $1.3480. Below support comes at $1.3400 (Nov 21 lows).

POUND

The pound climbed to the strongest level in a week against the dollar after an industry report showed U.K. retail sales growth accelerated in January, adding to evidence the recovery is gaining momentum.

The British Retail Consortium said like-for-like retail sales jumped 3.9% from a year earlier after increasing 0.4% in December. Economists forecast an increase of 0.8%.

Sterling has strengthened 8.7% in the past 12 months.

GBP/USD tested $1.6425/30 before retreated a bit lower $1.6400 . Now resistance comes at $1.6440 (Jan 30 lows) and $1.6520. The initial support comes at $1.6300 and $1.6250. Break below $1.6250 widens losses to $1.6200 (channel line from Oct 10).

YEN

Japan’s financial markets are closed today for a holiday.

USD/JPY consolidates above Y102.00 with initial resistance remains at yesterday’s highs on Y102.60. Above resistance comes at Jan 31 high on Y102.90/00, then - at Y103.40 (Jan 28 high). Initial support comes at Y101.20 (Feb 6 lows), then - at Y101.00.

DATA AHEAD

At 14:30 GMT Philadelphia Fed's Plosser speaks, followed by Fed's Yellen at 15:00 GMT.

At 15:00 GMT Dec Wholesale Inventories come.

Australian Fed Westpac Consumer Confidence ends the day at 23:30 GMT along with Japan preliminary Q4 GDP at 23:50 GMT.

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