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Daily Report: NZD Advances as CPI Boost Rate Hike SpeculationsNew Zealand dollar continues to make new 8 year high against Australian dollar today as faster than expected inflation reading boosted chance of rate hike in near term. CPI accelerated to 1.6% yoy in Q4, up from Q3's 1.4% and beat expectation of 1.5%. There are speculations that RBNZ would hike the official cash rate from the current record low of 2.50% by 25bps at next meeting on January 30. Some economists noted that both inflation and growth have surprised on the the upside comparing to the mid-December forecast and that could give some pressure to RBNZ to pull ahead the rate hike. Nonetheless, the chance for January hike is still at around 25% only as implied by swaps. The majority of economists expect that RBNZ would still wait until March meeting. |
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| Featured Technical Report | |
USD/JPY Daily OutlookDaily Pivots: (S1) 103.91; (P) 104.11; (R1) 104.36; More... USD/JPY recovers strongly after hitting 103.85 and intraday bias is turned neutral first. The development is now suggesting that pull back from 105.41 has already completed with three waves down to 102.85 already. Above 104.91 will likely resume the larger up trend through 105.41 to 38.2% projection of 77.13 to 103.73 from 96.56 at 106.72. On the downside, though, below 103.85 will extend the consolidation with another falling leg to 102.49 support and below. |
| FX Outlook 2014 |
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GBP To Outperform Euro, Underperform USDStrong economic growth in the UK should support GBP against other key European currencies, resulting in our forecasts that the pound would strengthen against both the euro and the defensive Swiss franc. UK's job market has improved significantly and the BOE would likely revised lower its threshold of unemployment rate that might lead the consideration of a rate hike. Yet, the revision should only have short-term, if any, negative impacts, on sterling. With domestic demand the key driver of recent growth, the economic environment in the country should allow greater tolerance of currency strength. We remain cautious in GBPUSD, anticipating the pair to fall this year amid expectations that US' growth would be stronger. Moreover, the Fed's kickoff of QE tapering vs BOE's sidelined stance could widen the yield differential. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Session: Orders and Options WatchGBP: The British pound jumped sharply in London on stronger-than-expected UK data and offers at 1.6405-10 and 1.6440-50 were filled, however, mixture of offers and stops in good size remains at 1.6465-75, more sell orders are tipped at 1.6500-20 area. On the downside, bids are raised to 1.6420-30 and also at 1.6370-80, stops are raised to 1.6360 and 1.6360, combination of bids and stops remains at 1.6300-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Trade Idea: USD/CAD - Sell at 1.1050The greenback has remained confined within narrow range and near term upside risk remains for recent upmove to extend further gain to 1.1000-10, however, loss of upward momentum should prevent sharp move beyond 1.1050-55 (100% projection of 1.0271-1.0737 measuring from 1.0588) and this wave v should hold below 1.1100, risk from there is seen for a strong pullback to take place later. Trade Idea Wrap-up: EUR/USD - Sell at 1.3580Euro's rebound after intra-day initial brief fall to 1.3508 suggests consolidation above this level would be seen and near term upside risk remains for retracement of recent decline, however, previous support at 1.3581 should limit upside and bring another decline later. A break of 1.3503-08 (1.236 times projection of 1.3699-1.3581 measuring from 1.3650 and said intra-day low) would extend the decline from 1.3894 to 1.3480-85 Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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