EUR/GBP: the euro is experiencing growth after December lows
The EUR/GBP currency pair is seeing a moderate rise, reaching the level of 0.8567, moving away from the lows of December 11 and recovering from the losses of recent days. Investors are analyzing economic reports from the eurozone and the UK, assessing their impact on the upcoming policy decisions of the European Central Bank (ECB) and the Bank of England, especially in the context of possible changes in interest rates.
Wednesday brought data on the eurozone's core consumer price index, which showed an increase from 0.4% to 0.5% in December, in line with expectations of a delay in the transition to a softer monetary policy. It is also worth noting the recent speech by Christine Lagarde, the head of the ECB, who did not rule out a change in the cost of borrowing, but indicated that this would not happen until the summer of 2024. A Reuters poll of economists shows that most expect the ECB to cut interest rates in the second quarter, with 45.0% of respondents anticipating a change in rhetoric at the June meeting. At the moment, market participants are considering the possibility of a correction of 150 basis points during the year, although ECB representatives have recently expressed caution, not even excluding maintaining the current rate level for the whole of 2024. The pressure on the euro increased yesterday after the publication of data for November on construction production volumes, which showed an acceleration in the decline from -0.6% to -1.0% on a monthly basis and from -0.7% to -2.2% on an annual basis.
- Resistance levels: 0.8585, 0.8611, 0.8632, 0.8656.
- Support levels: 0.8552, 0.8521, 0.8500, 0.8479.
USD/CHF: moves to an uptrend this week
As a result of the strengthening of the US dollar, the USD/CHF currency pair showed strengthening, trying to overcome the resistance barrier at 0.8682.
The pair's growth is fueled by the latest macroeconomic reports: the number of construction permits issued in December reached 1.495 million, which exceeds the forecast of 1.480 million, and the volume of new housing construction amounted to 1.460 million, ahead of expectations of 1.426 million.
Meanwhile, in Switzerland, the average annual inflation rate in 2023 was 2.1%, caused by higher prices for electricity, gas and rental housing, while the cost of petroleum products, package communication services and medicines decreased. Local goods rose in price by 2.4%, while imported goods rose by 1.4%. For comparison, in 2022 and 2021, the average annual consumer price indices were 2.8% and 0.6%, respectively. Today's producer price indicator, the monthly indicator of which corresponds to analysts' forecasts at -0.6%, slowed its negative dynamics from -1.3% to -1.1% year-on-year, highlighting the ongoing difficulties in the national economy.
- Resistance levels: 0.8682, 0.8807, 0.8898.
- Support levels: 0.8541, 0.8387.
USD/TRY: prospects for strengthening the lira are weak
The USD/TRY pair shows an increase, trading at around 30.1870, despite encouraging economic indicators from Turkey and the strengthening of the US dollar.
Data from the Turkish Statistical Institute (TurkStat) show that in December, the producer price index in agriculture increased by 6.34% over the month and by 52.66% year-on-year, largely due to an increase in fruit prices by 170.59%, eggs and poultry meat by 102.77%, legumes by 26.76% and fibrous crops by 25.93%. At the same time, the tense situation in the Red Sea has led to an increase in demand for transportation through the Trans-Caspian Transport Corridor, the development of which is actively supported by Turkey.
Therefore, despite the potential for growth and development of the Turkish economy, the strengthening of the Turkish lira seems unlikely, and the USD/TRY pair is expected to continue its positive movement.
- Resistance levels: 30.2925, 30.6011.
- Support levels: 30.0692, 29.7398.
Crude Oil market analysis
During the Asian trading session, WTI Crude Oil prices show mixed changes, stabilizing around the 74.00 mark.
The latest report from the Energy Information Administration of the U.S. Department of Energy (EIA) on the state of fuel reserves on January 12 indicates a decrease of 2.492 million barrels to 429.0 million barrels, which contradicts the previous increase of 1.338 million barrels and experts' forecasts of a decrease of 0.313 million barrels. The current level of oil and petroleum products reserves is about 3.0% below the average over the past five years. This week, investors will closely monitor the US data on the dynamics of sales in the secondary housing market for December and the consumer confidence index from the University of Michigan for January, which, according to forecasts, may increase from 69.7 to 70.0 points.
- Resistance levels: 74.00, 75.00, 76.00, 77.00.
- Support levels: 73.00, 71.77, 71.00, 70.00.