Article / 13 February 2018 at 22:41 GMT

US Wrap: Calm before a data storm

FX Trade Strategist /
  • No follow-through selling in USDJPY following earlier crash 
  • Trump threatens tariffs on steel and aluminium  
  • Wall Street manages another positive session 

By Michael O’Neill

NY focus: FX traders didn’t get spooked by the overnight plunge in USDJPY when they started the day. Instead, the currency pair bounced within a 107.40-107.80 range the entire session, closing at the top of that range.

There wasn’t any economic data of note and equity markets didn’t have any drama, leaving traders on the sidelines ahead of Wednesday’s Eurozone and US data. Markets ignored US President Donald Trump’s threat of tariffs and quotas on steel and aluminium imports.

EURUSD drifted higher, albeit in a tight band. Traders appear to think Wednesday’s Eurozone economic data will give added support for European Central Bank policy normalisation, overshadowing US retail sales and inflation data. Sterling peaked at the open and drifted lower in a 1.3850-1.3902 range.

The commodity bloc currencies had a noticeable pick-up in activity around the 1500 GMT option expiry time. The moves did not last, and prices quickly returned to pre-expiry levels.

Oil prices opened with an offered tone at $59.42/b and dipped to $58.42/b by mid-morning. They rebounded $59.19 at the close. The weekly American Petroleum Institute crude stocks change report recorded a rise of 3.94 million barrels.

 Calm before the storm ... US CPI and retail sales could create demand for dollars,
suggesting a choppy day for traders. Photo: Shutterstock

Wednesday focus: EURUSD is the focus and Eurozone and US data are vying for the spotlight. Traders seem to be expecting upside surprises to Eurozone Q4 GDP (forecast 2.7% vs previous 2.6%, q/q). If so, 1.2450 could be on the cards. 

On the other hand, US CPI and retail sales could create demand for dollars, suggesting a choppy day for traders. EURUSD is in a steeply rising uptrend channel, targeting 1.2405 and then 1.2450. Support is at 1.2350 and 1.2310.

EURUSD 30 minute
Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.


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