ForexNewsNow Daily Market Outlook for February 11th, 2011

NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar gained some ground against most of the other major currencies on Thursday according to the daily forex news. The Greenback firmed in part due to risk aversion caused by further uncertainty in Egypt.

Amid rumors he would finally step down, Egyptian President Mubarak instead gave a speech in which he insisted that he stay on as president and that he would cede power only after a September election. The speech angered anti-government protestors who stated they would increase the size of the protests in Tahir Square in Cairo.

Adding to the strength of the U.S. Dollar against the Euro, was news of intervention by the ECB to bring down the yield on Portugal’s benchmark 10-year bond. The bonds have traded over the critical 7 percent yield level for the past five days that is widely considered the yield level where a bailout appears necessary. If Portugal does ultimately require a bailout, it would become the third Eurozone nation to receive such financial assistance.

Although the price of gold ended Thursday’s session with little change, the Australian Dollar traded lower after RBA Governor Glenn Stevens told a parliamentary committee that the futures market had not priced in an RBA rate hike until late 2011 and that he felt “fairly content with where we are” with respect to interest rates.

February 10^th Important Economic Developments:

1. ECB Monthly Bulletin – This important release for fundamental EUR/USD analysis gave the market insight into how the ECB’s Governing Board made their last rate decision. The release also included a detailed analysis of the central bank’s outlook for future economic conditions in the Eurozone. Currency market trading in EUR/USD softened from the 1.3680 level to a low of 1.3614 in the hour and a half immediately after the bulletin’s release.
2. U.K. Keeps Official Bank Rate and Asset Purchase Facility Steady – The BOE maintained its benchmark Official Cash Rate and Asset Purchase Facility at the 0.50% and £200B levels respectively. This month’s decision was as expected by the market, although intraday analysis shows that GBP/USD softened from the 1.6067 level to 1.6013 in the hour after its release since some had been anticipating a tightening move by the BOE to help fight inflation.
3. U.K. Manufacturing Production – This important leading economic indicator for the U.K. fell by -0.1% for January compared with market expectations of an increase of +0.5% and December’s +0.6% rise that went unrevised. This disappointing result indicates weakness in the important manufacturing production sector of the British economy and pressured Cable to soften from the 1.6085 level down to 1.6027 shortly after its release.
4. U.S. Initial Jobless Claims – This important indicator of U.S. employment health that measures the number of people who filed for unemployment in the United States during the previous week fell to 383K versus the 411K result expected. Nevertheless, the previous week’s 415K level was revised slightly higher to 419K. This overall better than expected number buoyed the Greenback against the other major currencies, with EUR/USD falling from the 1.3642 level down to a low of 1.3581 in the wake of its release.
5. RBA’s Stevens Notes Rate Hike Not Priced In Until Late 2011 – Glenn Stevens, the Governor of the Reserve Bank of Australia, observed in testimony before the House of Representatives Standing Committee on Economics in Canberra that the futures market had not priced in an RBA rate hike until late 2011. He told the committee that, “The market pricing has, at present, nothing much happening until late in this year.” Stevens then added that, “Nobody’s expectations about the end of the year can be held that strongly at this stage. That’s not a guarantee that this happens, but I’m fairly content with where we are. I think we’re in a good position. I think we’re ahead of the game.” These comments indicated that additional rate rises in Australia were some way off and prompted AUD/USD to come off from the 1.0045 level until finding support just above parity at 1.0001.

February 11^th Forex Events for Traders to Watch

1. U.K. PPI Input – The PPI Input shows the change in the price of goods and raw materials that have been purchased by manufacturers and is an important economic release for GBP/USD that gives insight into the level of inflationary tendencies in the British economy. The key indicator is expected to increase by just +1.3% on the month compared with its previous rather worrying rise of +3.4%.
2. Canadian Trade Balance –The Canadian Trade Balance for December is expected to show a deficit of -0.4B versus November’s deficit, which was -0.1B. A higher deficit could weaken the Loonie and potentially boost USD/CAD back over parity.
3. U.S. Trade Balance – This closely watched economic indicator measures the difference in value between imported and exported goods and services. The persistent U.S. trade deficit is expected to widen to -$40.4B from the previous month’s -$38.3B result. Considerable forex market volatility often accompanies the release of this key number, so purchasing a forex binary option straddle ahead of its release could be a limited risk way of benefitting from such price swings. For more information on how to invest in forex binary options, click here.
4. Preliminary U of M Consumer Sentiment Survey – The University of Michigan will release the preliminary results for its latest consumer sentiment survey index. This important leading indicator of consumer spending is expected to rise slightly to 74.8 from last month’s 74.2 result.
5. ECB’s Trichet Speech – European Central Bank President Jean-Claude Trichet will be speaking as the Guest of Honor at the 467^th Schaffermahlzeit dinner for influential businessmen traditionally held in Bremen, Germany. Trichet’s speeches are closely watched by forex traders for clues to help them forecast future ECB interest rate policy changes.