EUROPEAN session review: The market is calm amid lack of news

Data released: 

09:30 GMT UK PMI Construction (Jan) 64.6 61.5 62.1 

10:00 GMT EMU Producer Price Index (MoM) (Dec) 0.2% 0.1% -0.1% 

10:00 GMT EMU Producer Price Index (YoY) (Dec) -0.8% -0.9% -1.2% 

The main currencies are consolidating in the narrow ranges amid lack of important news. Investors awaited tomorrow ECB meeting to see if ECB’s rated would be cut. It makes euro under pressure. 

On a more positive note the release of the latest PMI surveys from Europe provided further encouraging signals that the economic recovery continues to strengthen in early 2014. The eurozone manufacturing PMI increased by 1.3 point to 54.0 in January reaching its highest level since May 2011. The strengthening economic recovery in Europe will help to provide an offset to slowing growth in developing economies, and should help to support domestic currencies in the year ahead. 

EURO 

Euro consolidates in the narrow range. 

EUR/USD trades around $1.3520 after recently it fell to $1.3480 (initial support). Below support comes at $1.3400 (Nov 21 lows). Initial resistance comes at $1.3580 and $1.3680. 

POUND 

The pound rallies after the UK data released. UK PMI Construction grew to 64.6 points in January, from 62.1 points in December, according to data released. Consensus pointed to a drop to 61.4 points. 

GBP/USD recovered to current $1.6310. Break below $1.6250 widens losses to $1.6170 (channel line from Oct 10) and $1.6100. Initial resistance comes at $1.6480 (Jan 26 lows) and $1.6520. Strong resistance comes at $1.6660 (Jan 24 high). 

YEN 

The yen weakened from a two-month high against the greenback as U.S. stock futures rose. 

However Societe Generale sees USD/JPY may fell to 97.00. 

USD/JPY tested resistance at Y101.40 after earlier it fell to Y100.75 (initial support). Below losses may extend to Y100.00. Breaking of Y101.40 would open the door to Y101.80 (channel line from Jan 23). 

DATA AHEAD 

Tuesday, Feb 04 at 21:45 GMT NZ Unemployment Rate (Q4) will be published (6.0% vs 6.2%). 

At 22:30 GMT Australian AiG Performance of Services Index (Jan) will end the day’s data.

Source of information>>

More information>>