US session review: Dollar seta stable

Data released: 

14:45 GMT USA ISM New York index (Jan) 64.4 _ 63.8 

15:00 GMT USA Factory Orders (MoM) (Dec) -1.5% -1.7% 1.5%

The main currencies still consolidating. 

Greece was in focus lately after Reuters said it needs EUR 10-20 bln in third bailout package to fund 2014-15. Greece and Troika still discussing terms of reforms after court ruling on wages cuts.

The Congressional Budget Office lowered US deficit forecast for 2014 to $514 bln versus previous estimate of $560 bln and sees 3.1% growth in 2014.

US data were mixed.

The US ISM New York Index rose to 64.4 in January, from 63.8 recorded in December.

Meanwhile, US Factory Orders dropped 1.5% in December, compared with the 1.5% rise in November. This is slightly more positive than market consensus of -1.7%.

EURO

Investors await 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.

EUR/USD recovered to $1.3530 after recently it fell to $1.3480 (initial support) before resumed the fall. 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 fell as low as $1.6250 (initial support) before recovered to current $1.6280. Break below $1.6250 widens losses to $1.6170 (channel line from Oct 10) and $1.6100. Initial resistance comes at $1.6300, then - near $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 back above Y101.00 after earlier it fell to Y100.75 (initial support). Below losses may extend to Y100.00. Initial resistance placed at Y101.40 (Asian high), then - at Y101.80 (channel line from Jan 23).

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