News & Data:
The RBA minutes offered little new on the banks' outlook for the economy. However, the minutes highlighted that there was a debate about the timing of the rate cut. AUD/USD rose after the release and reached a high of 0.7810 earlier. The next major resistance level lies now at 0.7873, which is the current monthly high. AUD/NZD recovered slightly, hitting a high of 1.0480 after reaching a fresh record low in yesterdays‘ European session. One Australian bank notes that they "continue to expect another 25bps rate cut at the March meeting given the RBA's tendency towards consecutive moves in the early part of a new cycle and its own research which suggests that the impact of one 25bps rate cut on the economy is negligible".
EUR/USD fell sharply after the EuroGroup meeting finished and no deal was reached. The Euro recovered somewhat in the Asian session, but overall sentiment remains negative. While most analyst see a Greek exit from the Eurozone as unlikely, the tensions within the currency union will continue to weigh on the Euro in the near-term. Immediate support seen at 1.1320 (yesterdays‘ low) and then in the 1.1260-70 area. Any rallies above 1.14 will likely run into selling interest from leveraged names.
USD/JPY broke below the 118.30 support level yesterday and fell to a low of 118.10, but it quickly recovered back to 118.40. The current price action suggests that we’ll see another period of consolidation in the pair, with 117.00-20 and 119.20-30 the key levels to watch.
Looking ahead, the focus in the European session will be on UK inflation data at 0930 GMT and the German ZEW numbers at 1000 GMT. In the US session, there are no major data releases, but we’ll get the NY Empire Manu Index and NAHB Housing Market Index. Also, SNB Chairman Jordan will speak later today. See the calendar below for details.