Coming up Today (All Times GMT)
* AUD - Minutes of the RBA Monetary Policy Meeting (00:30)
* CNY - Consumer Price Index (02:00)
Last week, the euro traded under pressure, as unfolding events in Egypt triggered flows out of risky currencies for the benefit of the US dollar and gold. Also, the announcement that Bundesbank President Axel Weber and ex-German Finance Minister Peer Steinbrueck would not seek the seat of departing ECB Chairman Jean-Claude Trichet came as a big surprise. Both candidates share conservative views on monetary policy and have been criticizing ECB's program to buy risky government bonds. Therefore, their exit from the ECB race has fueled some bearish sentiment on the euro and pushed the EURUSD pair around its $1.3500 support. This week, investors will be following the release of Eurozone's Q4 GDP figures to see if they can help the euro revert its downside trend.
EURUSD Support / Resistance: 1.3500 / 1.3625
Last Thursday, the BoE Monetary Policy Committee kept its benchmark interest rate unchanged at 0.5%. Despite inflationary pressures, a wait-and-see attitude prevailed among policy members, as they remain cautious not to cut the fragile recovery. This week, inflation data will be on the spotlight with the release Tuesday of the latest CPI figures. It is expected that the continuous rise in food and energy prices will push inflation further up. Governor King has already warned that these above-target figures would not persist. However, if Tuesday's report shows that price increases are broad-based, it could amplify inflation expectations and put more pressure on the BoE to act.
GBPUSD Support / Resistance: 1.5990 / 1.6090
According to preliminary figures, Japan’s economy contracted by an annualized 1.1% in the fourth quarter. The data was less bad than forecasts, as most of the contraction was due to the unwinding of government stimulus measures. In reaction, the yen stayed unchanged at ¥83.20 per dollar, ahead of the release tonight of January’s inflation figures in China. If inflation numbers are higher than expected, it could add further weakness to the USDJPY pair.
USDJPY Support / Resistance: 83.00 / 83.60
February 14, 2011 - Markets.com