Last Friday it turned out that the negative job market data from January in the US was only an outlier. This time the non-farm labor market report was good across the board and confirmed the further economic recovery in the USA. Those who doubted a Fed rate hike midway through the year would have had to adjust their attitudes since Friday.
During the week, US stock markets rallied, while European markets were still right until mid-week were behaving. The crisis summit in Minsk and the ongoing negotiations on Greece's debt spread uncertainties. After a 17-hour negotiation marathon, the separatists and Ukraine initially agreed on an armistice. As a result, the European markets joined the US markets early Thursday and shot up.
Economy and monetary policy
EU: On Monday, Germany published the trade balance for December, This was very positive. Exports have risen accordingly and imports have fallen. The weak euro is slowly starting to take effect. Industrial production from Italy was on Tuesday. This was also surprisingly positive. A decrease on an annual basis and a slight increase compared to the previous month were expected. There was an increase compared to the previous year and a significant increase compared to the previous month. France's current account was released on Wednesday. Unfortunately, the deficit was well below expectations compared to the previous month. German consumer prices also disappointed. In January, prices declined, both compared to the previous month and to the previous year. In contrast, German GDP for the fourth quarter of 2014 was better than expected. French GDP stagnated. This Friday, the EU trade balance and GDP for the fourth quarter should be noted.
USA: After the positive labor market data in the past week, further data from the labor market was pending. The JOLTS report, which shows the demand for labor, was very positive. Unfortunately, retail sales for January were unexpectedly negative, although core retail sales declined to the same extent compared to December. This Friday, the import price index and the Michigan economic expectations should be considered.
Monetary policy: Monetary policy decisions were not made, at least in the developed countries. Skirmishes from Japan about the weakness of the yen briefly unsettled market participants. Some speeches from FED and ECB members did not change.
Technical assessment of the markets:
EUR / USD: The fluctuated until the middle of the week Price of the euro against the US dollar in a narrow range. However, a downward breakout could not be sustained. The Ukraine crisis summit and outcome, as well as poor retail sales in the US, strengthened the euro from Thursday. The 20s moving average has been broken and the next relevant resistance is in a range around $ 1.15300 per euro.
GBP / USD: The British pound was able to stand against the US - Claim dollars much better. The next resistance is in a range between $ 1.54-1.5550 per pound sterling.
USD / JPY: The USD / JPY currency pair shows a classic triangular consolidation, the was left upwards. Yen devaluation is likely to continue towards 123 Japanese yen per US dollar. However, the US dollar is currently weakening against other currencies, hence the sharp correction in the direction of the triangle.
USD / CAD: The USD / CAD currency pair is currently consolidating very strongly within the tapering triangle. The situation is interesting because one intervention by the Bank of Canada (rate cut) and another is expected. If the oil price continues to stagnate, a breakout from the triangle upwards is likely. On the other hand, the rate hike could have taken place in anticipation of rising oil prices again.
WTI: The price of the North American crude oil type WTI has been very volatile in the past two weeks, but with an upward trend. The April futures contract is currently at $ 53,150 a barrel and breaks out of the triangle on an hourly basis. The increase is confirmed by rising equity markets and the weak US dollar. The next relevant resistance is at $ 60 a barrel.