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Mid-Day Report: Dollar Strengthens Mildly, Focus on Trump Print E-mail
Market Overview | Written by | Jan 11 17 13:56 GMT

Mid-Day Report: Dollar Strengthens Mildly, Focus on Trump

Dollar strengthens mildly today ahead of US president-elect Donald Trump's first post election press conference. Nonetheless, the strength is mainly seen against European majors. The dip in EUR/USD sent the dollar index above 102.50 briefly but there is no follow through buying in the greenback yet. US stock index futures also point to a flat open. The press conference will be held at 11am eastern time today and no specific topic was announced. Nonetheless, markets will be eagerly looking for details of Trump's expansive fiscal plans; The so called "Trump Rally" in stocks, yield and dollar lost much steam since the start of the year and will need fresh stimulus for the next moves.

The World Economic Forum noted some of the most significant global risks for this year, in a report surveyed 750 experts. Dani Rodrik, proposed a theory of globalization "Trilemma" in which only two of democracy, national sovereignty and global economic integration could be simultaneously compatible And recent developments indicated that democracy and national sovereignty are the priorities. Meanwhile, the rise of populism, Brexit and Donald Trump's win post geopolitical risks. And, there could be step back from 2016's development including the Trans-Pacific Partnership and Trans-Altlantic Trade and Investment Partnership.

On the data front, UK industrial production rose 2.1% mom, 1.3% yoy in November, above expectation of 0.9% mom, 0.6% yoy. Manufacturing production rose 1.3% mom, 1.2% yoy, above expectation of 0.5% mom, 0.4% yoy. Construction output dropped -0.2% mom in November. Trade deficit widened to GBP -12.2b in November. From Japan, leading index rose to 102.7 in November.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0527; (P) 1.0577 (R1) 1.0604; More.....

EUR/USD dips mildly today but stays in range of 1.0339/0652. Intraday bias remains neutral for consolidation. As long as 1.0652 holds, outlook stays bearish and another decline is expected. Break of 1.0339 will extend the larger down trend to parity next. However, break of 1.0652 will now confirm short term bottoming and turn near term outlook bullish for stronger rebound to 1.0872 resistance first.

In the bigger picture, whole down trend from 1.6039 (2008 high) is in progress. Such down trend is expected to extend to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. On the upside, break of 1.1298 resistance is needed to confirm medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

EUR/USD 4 Hours Chart

EUR/USD Daily Chart

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
5:00 JPY Leading Index Nov P 102.7 102.6 100.8
9:30 GBP Visible Trade Balance (GBP) Nov -12.2B -11.2B -9.7B
9:30 GBP Industrial Production M/M Nov 2.10% 0.90% -1.30% -1.10%
9:30 GBP Industrial Production Y/Y Nov 1.30% 0.60% -1.10% -1.00%
9:30 GBP Manufacturing Production M/M Nov 1.30% 0.50% -0.90% -1.00%
9:30 GBP Manufacturing Production Y/Y Nov 1.20% 0.40% -0.40% -0.50%
9:30 GBP Construction Output M/M Nov -0.20% 0.30% -0.60%
15:00 GBP NIESR GDP Estimate Dec 0.50% 0.40%
15:30 USD Crude Oil Inventories -7.1M

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