Morning Market Review

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01/23/2020

EUR/USD

EUR shows a moderate decline against USD during today's Asian session, again returning to the "bearish" trend after a short growth the day before. Ambiguous macroeconomic statistics from the USA put some pressure on USD on Wednesday. Chicago Fed National Activity Index in December showed a decrease from 0.41 to –0.35 points, which turned out to be worse than market expectations of –0.30 points. At the same time, investors were optimistic about Existing Home Sales indicator. The indicator grew by 3.6% MoM in December after the decline by 1.7% MoM a month earlier. The forecast assumed an increase in sales dynamics by only 1.2% MoM. Investors are focused on the ECB decision on the interest rate followed by a press conference. At the moment, no changes are expected in the vector of European monetary policy; however, comments by officials will continue to be very important.

GBP/USD

GBP is trading slightly lower against USD during today's Asian session, correcting after confident growth the day before. GBP reacted positively to reports of the approval of the Brexit bill by the House of Lords. Now the document should be signed by Queen Elizabeth II and be ratified by the European Parliament, after which the UK will officially withdraw from the EU. Starting from February, the parties will resume the active phase of negotiations to form a new free trade agreement, but until then, the UK is obliged to comply with EU laws.

AUD/USD

AUD is showing strong growth against USD during today's Asian session, retreating from local lows of December 11, updated the day before. The instrument adds about 0.35%, testing the level of 0.6880 for a breakout. AUD is supported by strong results on the December report on the Australian labor market. Employment Change s. a. in December grew by 28.9K with a forecast of growth of only 15K. In the previous month, employment growth was 38.5K. At the same time, Part-Time Employment Rate increased by 29.2K, while Full-Time Employment decreased by 0.3K. The December Unemployment Rate unexpectedly dropped from 5.2% to 5.1%. Consumer Inflation Expectations in January rose from 4% to 4.7%, which was significantly higher than market forecasts of 3.8%.

USD/JPY

USD is falling against JPY during today's Asian session, continuing to develop a corrective downward momentum formed two days ago. The instrument is losing about 0.20% and is being traded near 109.50. The development of a downtrend in the pair is almost not hindered by ambiguous macroeconomic statistics from Japan. Japanese Exports went down by 6.3% YoY in December after the decline by 7.9% YoY in the previous month. Experts expected –4.2% YoY. Imports for the same period lost 4.9% after a decrease of 15.7% in November. The indicator also turned out to be significantly worse than forecasts, which assumed a decrease of 3.4% YoY. At the same time, for example, All Industry Activity Index in November increased by 0.9% MoM after falling by 4.8% MoM in October.

XAU/USD

Gold prices are stable during today's Asian session, waiting for new drivers to appear on the market. Demand for risk is balanced by poor macroeconomic statistics and the expectations of new mitigations from leading world regulators. Today, investors are focused on the ECB decision on the interest rate. Despite the fact that no adjustments to the monetary policy are expected from the European regulator, comments by officials can set the tone for trading for the next few days. The first meeting of the US Fed this year is scheduled for January 28-29, but no radical decisions are expected from it either. The US economy shows very good performance, so it is likely that the Fed will maintain a wait-and-see attitude.

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