Dollar Remains in Range After Weak Data

Dollar remains rangebound against majors after weak economic data from US.
Jan factory orders fell more than expected by -5.6%. Pending home sales also dropped more than expected to 108.7k. Meanwhile, Jan durable goods orders were revised further lower to -8.7% from -7.8%. One of the upside surprise today is the strong upward revision in Q4 unit labor costs in US, which was revised up from 1.7% to 6.6%. The big discrepancy is explained by bonus accruals which is not taken as a sign of increasing price pressures. Q4 non-farm productivity is revised down from 3.0% to 1.6%, meeting expectation.

After all, markets seems temporarily stabilized from yen carry trade unwinding and as global stock markets stabilized Further consolidation will likely to be seen as yen continues retreat. But risk remains on the upside for the yen in short term.

Released earlier, retail sales volumes retrenched sharply in January in the eurozone, which was undermined by severe drop in German retail sales in the same period. Retail sales dipped 1.0% mom, and -0.1% yoy. This follows gains of 0.3% mom and 2.2% yoy dec and, the loss is considerably larger than consensus expectation of -0.4% mom. Though, Q4 GDP growth was left unrevised at 0.9%, qoq 3.3% yoy which was the highest rate since Q2 of 2000

As widely expected, the Bank of Canada left its policy rate unchanged at 4.25% today, which is the sixth consecutive release in which the BoC was on hold. The accompanying statement said that risks to inflation are balanced and it seems likely BoC will still be on hold in the near future. RBA will be announcement rate decision in the upcoming Asia session and is expected to keep rates unchanged at 6.25%

Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.


Daily Pivots: (S1) 1.9106; (P) 1.9277; (R1) 1.9371;


Cable’s consolidation from 1.9183 continues today but lacks momentum for stronger recovery yet. At this point, intraday bias remains mildly on the downside as long as cable stays below 1.9323 minor resistance and further decline is still expected to follow towards 100% projection of 1.9913 to 1.9400 from 1.9672 at 1.9159 first. Touching of 1.9323 minor resistance indicate a low is formed and bring stronger recovery. But a break above 1.9412 support turned resistance is needed to indicate a short term low is formed. Otherwise, further decline is still expected to follow.

In the bigger picture, bearish divergence conditions are being displayed in weekly RSI, daily MACD and RSI already, suggesting that the whole up trend from 1.7047 might have completed before reaching mentioned 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). Focus is still on 1.9237/61 cluster support. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818, 161.8% projection of 1.9913 to 1.9400 from 1.9672 at 1.8842) first.

However, strong rebound from 1.9237/61 cluster support or break of 1.9672 resistance will indicate that the corrective fall from 1.9913 is merely correction to the rise from 1.8517 only and cable could make another high above 1.9913 and attempt to meeting 2.0106 cluster resistance before having a medium term reversal.

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