“The widely-spread fear that the euro zone’s biggest economy could now also be caught by the crisis virus has been soothed”
– Carsten Brzeski, an economist at ING in Brussels
German business confidence improved for a third consecutive month in January, a sign Europe’s largest economy may avoid a recession. The Ifo institute’s business climate index, based on a survey of 7,000 businesses, rose to 108.3 from 107.3 in December.
“We’ve had a clear turn toward positive momentum in the housing market at the end of 2011”
– Aaron Smith, a senior economist at Moody’s Analytics Inc.
U.S. month on month pending home sales decreased 3.5% in December, following a 7.3% increase in November, said the National Association of Realtors on Wednesday.
“There are growing indications that any [economic] downturn is likely to be mild and short-lived”
– Chris Williamson, the chief economist at Markit
The U.K. economy contracted 0.2 per cent in the fourth quarter of 2011 from the previous three months, said the Office for National Statistics said on Wednesday.
“Further delays in [Greece’s] negotiations [with private bondholders] would lead to renewed nervousness on the financial markets”
– Anja Hochberg, head of investment strategy at Credit Suisse Group AG
Swiss stocks erased two-day gains on Wednesday as health-care shares dropped on lower-than-expected 2011 financial results of Lo nza Group AG, Novartis and Roche Holding AG.
“Japan is losing its competitiveness to produce domestically”
– Hideki Matsumura, senior economist at Japan Research Institute
Japan has published first annual trade deficit since 1980 putting into question how long the country can rely on exports to serve a huge public debt.
“The euro could continue to make short-term gains as the remaining positions are covered, so its downside risks are low for now”
– State Street Global Markets (based on CNBC)
The currency couple has already penetrated resistance at 1.3075 and is presently moving toward a tough zone located at 1.3140/45. However, this area in conjunction with 1.3245/50 is unlikely to allow EUR/USD to advance any further.
“The yen is weakening, boosting earnings for exporters and fueling confidence in the Japanese stock market”
– Shinkin Asset Management Co. (based on Bloomberg)
EUR/JPY currency pair is about to hit a strong resistance situated at 102.56/63. In case the latter level is breached, the price might increase up to 104.25. Dips should be covered by supports at 100.77 and 100.40/30.
“If they are saying [February QE is] “likely” in the minutes that pretty much means definitely. That’s a pretty strong word from the MPC who would normally sit on the fence”
– Investec Bank PLC (based on Reuters)
In case the Cable is unable to climb over a downtrend line at 1.5680, the bias will turn bearish. The possibility of GBP/USD going down to 1.5500 en route to a long-term at 1.5270 will then increase.
“After the Fed, the dollar will have a harder time continuing this week’s gains against the yen. The topside has gotten heavy”
– Bank of Tokyo-Mitsubishi UFJ. (based on CNBC)
Resistance area at 78.25/35 (200 day ma) has repelled off USD/JPY, sending it down to a cluster of supports at 77.40/20 (55 and 100 day ma). From there the pair is expected to recover and attempt to challenge resistances 79.50 and 80.00.
“The Fed was crystal clear in its intentions to keep rates low until at least 2014”
– Oppenheimer (based on WSJ)
The short-term outlook for USD/CHF is negative. The pressure on a key support at 0.9200 is increasing. In case it does not withstand, a fall might extend down to 0.8895 (55 week ma). Resistances at 0.9315 and 0.9340/55 cap the pair from above.
Merkel Makes Appeal for Time to Solve Crisis
German Chancellor Angela Merkel appealed to business leaders at the World Economic Forum to give policy makers the space they need to tackle the debt crisis, pledging that Europe will pull together and restore confidence.
Economic Gains Aid Obama
Mitt Romney mounted a fresh attack on President Barack Obama’s stewardship of the economy Wednesday, while a new Wall Street Journal/NBC News poll raised caution signs for Mr. Romney’s strategy of putting the economy at the center of his campaign.
China Overtakes Japan as World’s Top Coal Importer
China overtook Japan as the world’s top coal importer for the first time in 2011, customs data from the countries showed, partly driven by robust Chinese demand.