EUR/USD: the "American" recovers losses
The single currency of the Eurozone is developing a corrective trend, but as a result of the active strengthening of USD quotations during the last three days the EUR/USD trading instrument is losing ground, testing the 1.0729 level.
The current trend has a strong momentum going forward and the macroeconomic data block has not provided much support to the EUR as December retail sales slumped by 2.7% beating market expectations of -2.5% and the 2022 total was down 2.8% with an estimate of -2.7%. Excessive volatility is not expected on the European markets today and investors will want to evaluate the industrial production statistics of Germany for December, the index of which is expected to lose -0.7%.
- Resistance levels: 1.0800, 1.0990.
- Support levels: 1.0680, 1.0520.
AUD/USD: RBA has managed to support the national currency
The trading pair AUD/USD is developing an upward dynamic within the framework of the correction amid the loss of initiative from the "bears", which was held by them for three sessions in a row, where the instrument updated the local minimum of January 6. The Reserve Bank of Australia held a meeting which resulted in officials deciding to raise the interest rate by 0.25%, strengthening the target to 3.35% giving a boost to positive momentum.
The regulator's accompanying statements hinted at the development of a further inflation-targeting program through further monetary corrections. Economists have estimated that the consumer price inflation rate could fall to 4.75% by the end of 2023 and could reach 3.0% by the end of Q2 2025. Officials have noted the resilience of fundamentals for a decline in the consumer price index over the medium term, wishing to support or boost the effectiveness of earlier measures with an additional tightening of monetary policy before the end of spring this year. However, analysts at the regulator do not see a possible recovery of economic indicators. According to the expectations of the monetary watchdogs, the dynamics of the Gross Domestic Product will fall to 1.5% in the next two years. The tense situation in the segment of employment is separately noted, as a number of Australian companies continue to experience difficulties in hiring full-time employees, but a moderate positive trend has made itself felt. However, the RBA experts forecast a gradual increase in the number of unemployed to 4.5% by mid-2025 instead of the current 3.5%.
- Resistance levels: 0.6950, 0.7000, 0.7050, 0.7100.
- Support levels: 0.6900, 0.6850, 0.6800, 0.6750.
USD/CAD: US labour market supported the pair
The publication of strong US labor market data at the end of the previous week allowed the USD/CAD pair to advance to 1.3470.
According to the report the number of employed people, not including the AIC segment, reached 517.0 thousand in January, having surpassed 2.5 times the previous estimate of 185.0 thousand, having beaten the previous showing of 260.0 thousand, while the unemployment rate had dropped to a record 3.4%, while the market estimate was 3.6% and the previous reporting period was 3.5%.
For investors in USD/CAD trades, the US dollar is of more interest, and the publication of data on the Canadian economy only adds to the upward trend. Thus, the level of approved applications for construction work in Canada fell by 7.3% month-on-month in December, against market estimates of -5.0% and the previous value of 14.9%. Meanwhile, business activity from Ivey in January strengthened considerably to 60.1 points, well above the expected 42.3 points and the previous 49.3 points.
- Resistance levels: 1.3500, 1.3670.
- Support levels: 1.3250, 1.2970.
Oil market analysis
Brent benchmark crude oil is quoted at 82.40.
The global market for oil products is showing a stable trend and most analysts agree that restrictive measures by the collective West to limit Russian oil have failed to show the expected result. Earlier Bloomberg published an article which recorded another update on the record of Russian oil shipments by sea. Thus, as of February 3, the daily supply rate rose by 125.0 thousand barrels to a target of 3.456 million barrels, and the main importers were India, PRC and Turkey with a share of 3.29 million barrels. Meanwhile, the pipeline supply load continues to decline, with January's value for Poland and Germany at just 120.0 barrels per day. Earlier it was reported that the G7 sanctions policy of fixing an upper ceiling on the cost of supplying refined products by sea from Russia at $100.0 and $40.0 a barrel based on category has now been extended by the accession of Japan. The sanctions came into force on 6 February, but the caps will be adjusted every two months based on market conditions.
- Resistance levels: 83.30, 89.00.
- Support levels: 79.60, 74.00.