Euro trades mildly softer today in rather quiet markets. Eurozone Sentix investor confidence dropped to 17.4 in February, down from 18.2, but beat expectation of 17.4. Sentix noted in the release that "investors are reacting to Donald Trump’s first official acts and see in these a burden for the global economy." Eurozone PMI dropped 0.3 pt to 50.1 in January. German factory orders rose 5.2% mom in December, versus expectation of 0.7% mom. German finance minister Wolfgang Schäuble blamed ECB for making Euro’s exchange rate "too low" and monetary polices that are "too loose" for Germany. He said that "when ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany’s export surplus…. I promised then not to publicly criticise this [policy] course. But then I don’t want to be criticized for the consequences of this policy."
The British Chambers of Commerce said today that depreciation in the exchange rate of Sterling has been a "double edged sword" for many UK businesses. And, "nearly as many exporters say the low pound is damaging them as benefiting them." And "or firms that import, it’s now more expensive, and companies may find themselves locked into contracts with suppliers and unable to be responsive to currency fluctuations." Also, " inflation is going to be an important concern for businesses over the coming year." According to the survey in BCC poll, nearly half of 1500 companies said decline in Pound had a negative impact of domestic sales margins, 25% said it had positive impact on export margins, 22% said it had negative impact of export margin.
Elsewhere, Japan labor cash earnings rose 0.1% yoy in December, below expectation of 0.4% yoy. Australia retail sales dropped -0.1% mom in December versus expectation of 0.3% mom growth. China Caixin PMI services dropped 0.3 pt to 53.1 in January.
Aussie drops mildly today after much weaker than expected data. But it’s staying as the strongest major currency for the month so far. RBA rate decision will be a focus in the upcoming Asian session. It’s widely expected the central bank will keep interest rate unchanged at 1.50%. Nonetheless, more attention would indeed be on the monetary policy statement on Friday, which would give more information on how RBA views recent patch of soft data.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.0729; (P) 1.0763 (R1) 1.0818; More…..
EUR/USD weakens mildly today but stays in range of 1.0619/0828. Intraday bias remains neutral first. As noted before, choppy rise from 1.0339 is seen as a correction. Hence, in case of another rise, upside should be limited by 1.0872 resistance and bring fall resumption eventually. Break of 1.0619 will turn bias to the downside for retesting 1.0339 low.
In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 0:00 | JPY | Labor Cash Earnings Y/Y Dec | 0.10% | 0.40% | 0.20% | 0.50% |
| 0:00 | AUD | TD Securities Inflation M/M Jan | 0.60% | 0.50% | ||
| 0:30 | AUD | Retail Sales M/M Dec | -0.10% | 0.30% | 0.20% | 0.10% |
| 1:45 | CNY | Caixin PMI Services Jan | 53.1 | 53.6 | 53.4 | |
| 7:00 | EUR | German Factory Orders M/M Dec | 5.20% | 0.70% | -2.50% | -3.60% |
| 9:10 | EUR | Eurozone Retail PMI Jan | 50.1 | 50.4 | ||
| 9:30 | EUR | Eurozone Sentix Investor Confidence Feb | 17.4 | 16.8 | 18.2 |
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