USD/CAD: dollar is moving up
USD/CAD is growing moderately in the morning trading session, being influenced by the bullish trend which was formed earlier.
The current week was marked with the retreat from the local minimum of November 16 due to the decision of investors to refrain from the market activity ahead of the U.S. Federal Reserve summit, scheduled for Wednesday, waiting for the key value to strengthen by 0.25%, which will raise the target to 4.5%, thereby giving a hint to economists about the soonest completion of a system tightening of monetary parameters. Meanwhile, experts urge to refrain from hasty evaluations, admitting that the position of the regulator's chairman J. Powell may take the side of "hawks". In general, economists agree in their position that the target value by the end of 2023 has no chance to cross the 5.0% mark, even on the contrary - a slight correction is likely by the end of the year.
The data on the Canadian labor market will not be published this week, that is why investors are mostly interested in the PMI (business activity index) data from S&P Global and the data on the GDP (gross domestic product) dynamics for November, which is forecasted to fluctuate zero, having been previously fixed at 0.1% for October.
- Resistance levels: 1.3450, 1.3500, 1.3550 and 1.3600.
- Support levels: 1.3400, 1.3350, 1.3300, 1.3250.
NZD/USD: January low update
The NZD/USD trading instrument reflects the downtrend, being influenced by the "bearish" signal from Monday's trading session. The pair is in the area of 0.6450, continuing the decrease, having updated the local minimum of January 23.
Some support for the pair was provided by the data from China, which recorded a recovery in business activity. Thus, the NBS (National Bureau of Statistics) reported that the manufacturing sector in January strengthened to 50.1 points from 47.0 points, beating investors' expectations of 49.7 points and services sector to 54.4 points from 41.6 points, beating the forecast growth of 51.0 points.
The New Zealand currency is showing vulnerability ahead of the U.S. Federal Reserve's meeting, the results of which will be announced tomorrow. The agency is expected to raise the interest rate by 0.25%, but there is a chance that the chairman of the regulator will announce the continuation of monetary tightening at a soft pace in the short term. Whatever the outcome of the summit, economists expect the dollar to gain new support for further gains as it strengthens ahead of national labor market statistics due out later in the week.
- Resistance levels: 0.6500, 0.6535, 0.6600, 0.6650.
- Support levels: 0.6450, 0.6400, 0.6350, 0.6288.
USD/JPY: Japan's retail sales rose unexpectedly
The trading pair USD/JPY is at 130.32, however the macro report released this morning corrected the recent negative trend.
According to the statistics, one of the main values reflecting consumer activity, the index of retail sales for December has strengthened from 2.5% to 3.8%, beating market expectations of a 3.0% growth, while the value for large retailers rose 1.1% against a decline of 1.3% in November. Moreover, the unemployment rate for the same period was 2.5% with the jobless claims ratio still at 1.35.
- Resistance levels: 131.60, 135.40.
- Support levels: 129.00, 126.30.
Gold analysis
The precious metal is trading at 1920.00, influenced by contradictory factors. A week earlier the asset successfully updated April's high at 1950.00, backed by a weaker USD Index.
The announced summits of the ECB (European Central Bank) and the Bank of England serve to strengthen the "bears". The financial authorities of the two countries are set to raise key values by 0.50% and also give signals to the market on further monetary tightening by a milder step. Investors are waiting for the consumer price index for January to be published this week. Preliminary estimates suggest inflation will hold above the 9.0% level, surpassing the 2.0% target set by the ECB. The economic recession poses much more of a threat to British and European regulators than to the U.S. agency, so there is limited flexibility for the former to proceed.
- Resistance levels: 1930.00, 1952.53, 1974.22, 2000.00.
- Support levels: 1915.00, 1900.00, 1886.46, 1869.49.