News & Data:
It was a risk-off session with most of the Asian equity indices lower on the day, except the Shanghai Composite. In commodities, Copper was the big mover and the large drop dragged Gold & Silver lower as well. Oil prices have recovered slightly yesterday, but was sold again in Asia, with WTI declining $1 overnight. The S&P had a strong open in New York, but momentum faded away above 2050 and the index is now approaching again the 2000 level. Overall, commodities have again weighed on risk sentiment and the JPY & USD have been the main beneficiaries.
In FX, the Australian Dollar declined 100 pips overnight as the Copper decline weighed on the currency. According to a 2013 report, Australia is the fifth largest copper producer in the world. Tech support eyed at 0.8030-40 and decent bids reported ahead of the 0.80 level. Stops resting beneath and not much chart support seen until 0.77 (summer 2009 low) should price break sub-0.80. The Kiwi Dollar declined along with the Aussie, but it was only a 50 pips drop in NZD/USD. Meanwhile, USD/CAD is nearing the 1.20 level again and a breakout seems imminent.
EUR/USD revisited the 1.1752 low yesterday, but bounced from there and rose slowly towards 1.1795 during the Asian session. Dealers expect decent selling interest between 1.1870 and 1.19, but think we will need a clear break sub-1.1750 for downside momentum to accelerate. GBP/USD had a quiet session after the high intraday volatility yesterday. The pair bounced off 1.5080 despite the much weaker than expected inflation figures and rallied 100 pips in a few hours. However, it failed a fourth time this week to reach the 1.52 level. Overall sentiment remains GBP-negative, so if we don’t take that resistance level out soon, pressure on the Pound will resume.
Looking ahead, the only Tier-1 econ data releases is the US retail sales data at 13:30 GMT. Also, keep an eye on the European Court of Justice regarding the ECB's Outright Monetary Transactions (OMT) at 08:30 GMT. The German Constitutional Court has opposed the OMT, saying that the ECB was acting outside its remit. The decision could have an impact on the Euro.