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Stocks and Dollar lack direction

The US S&P 500 failed to hold on to gains yesterday, 22 February, ending up 0.23 per cent lower at 2,703.96

The US S&P 500 failed to hold on to gains yesterday, 22 February, ending up 0.23 per cent lower at 2,703.96. And with the US Dollar Index, which measures the greenback against a basket of peers, was only up 0.2 per cent at 89.923, suggesting there is a lack of direction in the currency markets.

US President Donald Trump is due to announce the largest package of sanctions against North Korea to put more pressure on Pyongyang over its nuclear and ballistic missile tests.

The president and CEO of the Federal Reserve Bank in Dallas, Robert Kaplan, said the Fed should continue to raise interest rates this year in response to faster economic growth, fuelled by recent tax cuts and a stronger global economy.

Our focus today will be on European inflation data due to be released by Eurostat at 10:00 (GMT). We anticipate prices for goods and services would have risen by 1.3 per cent. And the Euro’s weakness this week against the US Dollar could continue should the figures show the increase in prices was slower.

EUR/USD $1.2298 (-$0.0031)

EUR/USD opened in Asia at $1.2329 towards the upper end of Thursday’s session. We began the session on the front foot, seeing a slight rise to today’s high of $1.2337. The pair came under pressure as the session wore on, eventually dropping to today’s low of $1.2294. The market is still around the lows as we head into the European open, $1.2298. From a technical view, we look for support at $1.2276 and $1.2221. On the upside, $1.2369 and $1.2407 are in focus.

GBP/USD $1.3942 (-$0.0012)

Cable opened in Asia at $1.3959 towards the upper end of Thursday’s session. We began the session on the front foot, rising to today’s high of $1.3965. The pair came under pressure as the session wore on, falling to today’s low of $1.3937. The market is off the lows as we head into the open in Europe, trading at $1.3942. From a technical view, we look for support at $1.3878 and $1.3801. On the upside, $1.1401 and $1.4067 are in focus.

USD/JPY ¥106.95 (+¥0.21)

USD/JPY opened in Asia at ¥106.74 towards the upper end of Thursday’s range. We began the session on the back foot, falling to today’s low of ¥106.63. Usd/Jpy was largely unresponsive to January Japanese CPI data which topped expectations – up 1.4% (f/c +1.3%) y/y, ex. fresh food up 0.9% (f/c +0.9%) y/y and ex. fresh food, energy up 0.4% (f/c +0.4%) y/y. The pair gained support as the session wore on, rising to today’s high of ¥107.02. The market is still around the highs as we head into the European open, trading at ¥106.95. From a technical view, we look for resistance at ¥107.38 and ¥108.00. On the downside, ¥106.36 and ¥105.97 are in focus.

GBP/EUR €1.1333 (+€0.0019)

GBP/EUR opened in Asia at €1.1315 towards the upper end of Thursday’s range. We began the session on the back foot, seeing a slight drop to today’s low of €1.1312. The market found support as the session wore on, rising to today’s high of €1.1341. The pair is off the highs as we head into the European open, trading at €1.1333. From a technical view, we look for resistance at €1.1355 and €1.1390. On the downside, €1.1280 and €1.1247 are in focus.

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