UK and European Interest Rate Decisions

U.S. Dollar Trading (USD) the positive momentum continued into Asia and Europe but stocks in the US failed to extend the recent rally as Greece negotiations staggered along and profit takers emerged. There was no major data out overnight with the market relative quiet ahead of the two central bank meetings today. The Euro (EUR) the EUR/USD attempted to break strong resistance at 1.3280 but dipped on news that critical debt negotiations had stalled. The latest stumbling block is the pension reforms proposed in the new budget to help reduce the projected deficit.  In US stocks, DJIA +5 points closing at 12884, S&P +3 points closing at 1350 and NASDAQ +11 points closing at 2915. Looking ahead, Weekly Jobless Claims forecast at forecast 370k vs. 367k previously. Also, ECB Rate meeting forecast to hold at 1.0% and ECB President Draghi holds press conference.

The Japanese Yen (JPY) the USD/JPY pushed slightly higher before closing back at the Y77 level waiting for more inspiration to move higher. The Japanese economy is very stagnant and suffers from deflation with recent government and monetary policies struggling to spark growth. The Sterling (GBP) saw some heavy selling come through on the GBP/USD due to profit taking ahead of the BOE rate meeting today. Most expect the BOE to increase the Asset Purchase program by 50bn and if the statement is bearish we could see more GBP/USD action to the downside. EUR/GBP is pushing higher towards 0.8400. Australian Dollar (AUD) came under profit taking pressure with the recent AUD/USD rally falling back to 1.0740 early Asia Thursday after high Chinese inflation. Update Chinese January CPI at 4.5% vs. 4.1% y/y previously. Looking ahead, BOE Rate Announcement forecast a hold at 0.5% vs. 0.5% previously with an increase of Asset purchase program to 325bn vs. 275bn previously.

Oil & Gold (XAU) Gold pulled back from the $1750 level but found support at $1730 and still in uptrend above $1700 an ounce. OIL/USD tested $100 but failed to break and fell back to $98 on USD strength in the US session.

Pairs to watch

EUR/USD Greece debacle nearly over?

GBP/USD BOE to print money?

TECHNICAL COMMENTARY