Forex News

Australia Dollar (AUD) could trade sideways between 0.6700 and 0.6745. In the longer run, there is a chance for AUD to test the significant resistance at 0.6765, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

AUD to edge higher over the coming days

24-HOUR VIEW: "AUD soared to a high of 0.6747 in the late Asian session yesterday, and then traded mostly sideways for the rest of the session. The price movements did not lead to any increase in upward momentum, and AUD could continue to trade sideways today, most likely between 0.6700 and 0.6745."

1-3 WEEKS VIEW: "Yesterday, AUD tested the resistance at 0.6745 (high of 0.6747) before easing. Upward momentum is increasing, but not strong enough to indicate a continued rise just yet. However, as long as the ‘strong support’ at 0.6680 is not breached, there is a chance for AUD to edge higher over the coming days and test the significant resistance level at 0.6765."

Pound Sterling’s (GBP) recent weakness reflects lingering sensitivity to bond-market volatility, though calmer conditions may allow EUR/GBP to drift back below 0.870. - December UK inflation data offered little new for the Bank of England, with core services steady at 4.0% and a modest headline uptick driven by food prices, ING's FX analyst Francesco Pesole notes.

UK inflation data unlikely to shift BoE outlook

"Sterling’s underperformance yesterday was, in our view, primarily mirroring the risks of importing bond volatility for a currency that recently experienced periods of negative correlation with back-end yields on fiscal worries. Calmer markets this morning mean EUR/GBP may face some downward pressure and return below 0.870."

"On the data side, there was nothing in the UK inflation report for December – released this morning – that is likely to move the needle for the February Bank of England meeting. Our UK economist, James Smith, notes that the BoE’s preferred gauge of 'core services', which excludes volatile and indexed items, came in at 4.0% for the third consecutive month."

"Headline inflation accelerating slightly more than consensus to 3.4% was partly due to food prices accelerating to 4.5%. Food is something MPC members are monitoring closely, even though it remains well below the 5.3% BoE forecast."

The near-term bias is tilted to the upside, but Pound Sterling (GBP) may not break above 1.3505, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP may not break above 1.3505

24-HOUR VIEW: "Yesterday, GBP soared to a high of 1.3491 before pulling back, closing modestly higher by 0.12% at 1.3443. The pullback amid slowing momentum and overbought conditions suggests GBP is unlikely to rise further. Today, we expect GBP to range-trade, most likely between 1.3420 and 1.3470."

1-3 WEEKS VIEW: "Despite advancing at a brisk pace over the past two days, GBP has not gained much momentum. That said, the near-term bias is tilted to the upside toward 1.3505. Based on the current momentum, GBP may not break clearly above this level. On the downside, a breach of 1.3380 could indicate that GBP is likely to range-trade instead of trading with an upward bias."

Brief concerns over a European pullback from US assets faded quickly, with markets showing little follow-through despite Davos-driven hopes of geopolitical easing, ING's FX analyst Francesco Pesole notes.

EUR/USD seen below 1.170 despite Davos optimism

"A headline about Danish pension fund AkademinerPension exiting US Treasuries yesterday briefly fuelled extra concerns about a European exodus from US assets, despite the actual size of the fund’s holdings being very small in December ($100m). Markets aren’t following through on these concerns this morning, and if Davos brings some geopolitical de-escalation, the associated EUR gains may start to be trimmed today."

"Our view is that unless bond volatility spikes again – not our baseline – EUR/USD belongs below 1.170 in a seasonally strong period for USD and in light of the recent hawkish repricing of front-end USD yields."

"In the rest of Europe, we are also wary of chasing the rally in SEK much further for now. EUR/SEK is trading at over 2% short-term undervaluation and may be due to an upward correction – we believe to 10.80 – before re-establishing a medium-term depreciation trend."

Instead of continuing to rise, EUR is more likely to consolidate between 1.1690 and 1.1770. In the longer run, risk for EUR remains on the upside; the probability of it breaking above 1.1805 is not high for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Risk for EUR remains on the upside

24-HOUR VIEW: "EUR lifted off on the open yesterday and surged to a high of 1.1768 before easing. EUR closed higher by 0.68% at 1.1724, its largest one-day gain in more than four months. The sharp rise seems excessive, and instead of continuing to rise, EUR is more likely to consolidate today, probably between 1.1690 and 1.1770."

1-3 WEEKS VIEW: "EUR opened on a soft note on Monday, but it has since rallied sharply, reaching a high of 1.1768 yesterday. While the sharp rally seems overextended, there is scope for EUR to continue to rise. However, the probability of it breaking above 1.1805, near last month’s high, is not high for now. Meanwhile, the risk for EUR remains on the upside, provided that it does not break below 1.1560 (‘strong support’ level)."

LME Copper has stalled near strong resistance at 13,400, with weakening momentum suggesting a potential near-term consolidation, Société Générale's FX analysts note.

Copper faces consolidation risk below 13,400

"LME Copper met strong resistance near 13400 earlier this month, causing the recent up‑move to stall. The daily MACD, which had reached multi‑year highs, has now slipped below its trigger line, signalling fading upward momentum and possibility of a pause."

"LME Copper is near a steeper ascending trend line; a short‑term consolidation cannot be ruled out within limits of recent pivot low near 12300 and 13400. A cross above 13400 would confirm the next leg of the uptrend."

Silver prices (XAG/USD) rose on Wednesday, according to FXStreet data. Silver trades at $95.04 per troy ounce, up 0.84% from the $94.25 it cost on Tuesday.

Silver prices have increased by 33.70% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 51.13 on Wednesday, up from 50.47 on Tuesday.

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