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The FxPro Analyst Team

FxPro Forex Analysis: The Rout in Equities Continues

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Equities are once again down this morning after a hard sell-off last week, in stark contrast to the recent run higher. The NFP report had little impact on stocks but affected the USD, sending GBPUSD lower from 1.42157 to test the 1.41000 support area.

Fed Chair Janet Yellen was out with comments over the weekend as she departs her role on the FOMC. She said that US stocks and commercial real estate prices were high. Price-earnings ratios are near the high end of their historical ranges. Commercial real estate prices are now quite high relative to rents. It is a source of some concern that asset valuations are so high.

In other news, Major Credit Card Lenders are prohibiting the use of Credit Cards for use in funding Cryptocurrency transactions.

UK PMI Construction (Jan) was 50.2 v an expected 52.0, from 52.2 previously. GBPUSD gapped down from 1.42257 to 1.42194 at the time of this release and then sold off to 1.42018.

Eurozone Producer Price Index (YoY) (Dec) was 2.2% v an expected 2.3%, from a previous reading of 2.8%. EURUSD sold off from 1.24863 to 1.24752 by this data point.

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US Non-Farm Payrolls (Jan) was 200K, higher than the expected 180K, from a prior 148K, which was revised up to 160K. This measures the change in the number of employed people in January. The Unemployment Rate (Jan) was as expected, unchanged at 4.1%. This measures the percentage of the total workforce unemployed and actively seeking employment during January. Average Hourly Earnings (YoY) (Jan) was 2.9% v an expected 2.6%, from 2.5% previously. Average Weekly Hours (Jan) was 34.3 v an expected 34.5, from a previous 34.5. Labor Force Participation Rate (Jan) was 62.7% v an expected 62.8%, from a prior reading of 62.7%. EURUSD sold off from 1.24921 to 1.24090 following these data releases. Gold moved lower from 1345.70 to 1327.00.

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US Factory Orders (MoM) (Dec) was 1.7% v an expected 1.5%, from 1.3% previously, which was revised up to 1.7%. USDJPY sold from 110.418 to 110.315 before recovering to 110.476.

Baker Hughes US Oil Rig Counts was released, with a headline number coming in at 765 against last week’s number of 759. The expected number this week was 758. WTI Oil can become volatile around this data release and will be in traders’ minds when trading resumes on Monday.

FOMC Member Williams spoke about the US economic outlook at the Financial Women of San Francisco luncheon. His main remark was that the Fed needed to continue on its path of raising rates. He said in his comments that he is optimistic about the economy, which is performing better than expected but is not shifting gears. He still believes the Phillips curve holds true. He said he expects growth this year to pick up by 2% and for inflation to pick up this year and next.

EURUSD is unchanged overnight, trading around 1.24530.

USDJPY is down -0.12% in early session trading at around 110.019.

GBPUSD is down -0.09% to trade around 1.41063.

USDCAD is unchanged overnight, trading around 1.24184.

Gold is down -0.10% in early morning trading at around $1,331.09.

WTI is down -0.32% this morning, trading around $64.63.

Major data releases for today:

At 08.15 GMT, Spanish Markit Services PMI (Jan) is expected to be 55.4 from a prior reading of 54.6.

At 08:55 GMT, German Markit PMI Composite (Jan) is expected to be unchanged at 58.8. Markit Services PMI (Jan) is also expected unchanged at 57. EUR currency pairs and the German 30 Index may see a sudden change in price due to this data release.

At 09:00 GMT, Eurozone Markit PMI Composite (Jan) is expected unchanged at 58.6. Markit Services PMI (Jan) is also expected unchanged at 57.6. EUR currency pairs may be moved by this data point.

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At 09.30 GMT, UK Markit Services PMI (Jan) is expected to be 54.3 from a prior reading of 54.2.

At 14:45 GMT, US Markit Services PMI (Jan) is expected unchanged at 53.3. Markit PMI Composite (Jan) is expected to be 53.9 from a previous reading of 53.8. USD crosses could experience volatility around these data releases.

At 15:00 GMT, US ISM Non-Manufacturing PMI (Jan) is expected to be 56.3 from 56.0, which was revised up from 55.9 previously. USD pairs may be moved by this release.

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At 16:00 GMT, ECB President Draghi will testify on the ECB’s Annual Report for 2016 before the European Parliament in Strasbourg.

Major releases for this week:

On Tuesday at 00:30 GMT, The Royal Bank of Australia will release its Interest Rate Decision and Rate Statement.

On Wednesday at 08:00 GMT, the ECB will release its Non-monetary policy’s meeting minutes.

On Wednesday at 20:00 GMT, the Royal Bank of New Zealand will release its Monetary Policy Statement, Rate Statement and the Interest Rate Decision. At 21:00, a speech by Deputy Governor Grant Spencer will be followed by a press conference.

On Thursday at 12:00 GMT, the Bank of England will release its Interest Rate Decision and Monetary Policy Statement, MPC Official Bank Rate Vote results and its Inflation Report.

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