Key day for Sterling and FTSE

Today will likely see volatility abound as market news offers several opportunities for trading. The UK is expecting the release of the CPI y/y data, expected at 1.4%, and Prime Minster May is due to speak regarding her stance on Brexit. A better than expected CPI will see the GBP strengthen and vice versa for a worse than expected result. For the speech, markets will be expecting May to be extreme, citing that she wants a clean break from the EU with no lingering ties. If she sticks to this rhetoric, we will see the GBP punished while the FTSE is likely to trade higher. Should she move away from her hard line, we could see some respite in the GBP which will lead the FTSE lower.

 

17.01.2016 09:30 UK CPI y/y GBPUSD

 

USD Index lingers at support ahead of key data

The USD Index, a measure of the US dollar’s strength against a basket of currencies, has come under pressure in recent trade and continues to consolidate around the 101 level after falling from its near 104.00 highs. Today’s Empire State Manufacturing Index, expected at 8.1, and speeches by FOMC members and the Treasury Secretary are likely to add to the volatility in the USD. Better than expected data and/or positive speeches will see the USD strengthen while worse than expected data and negative speeches by the speakers will see the USD weaken further.

 

17.01.2016 13:30 US Empire Manufacturing USDCHF

 

Kiwi dollar looks to GDT Price Index for support

The New Zealand dollar has enjoyed a good start to the year against the USD as we see the pair up by over 200 pips so far this month. Today’s release of the GDT Price Index, which measure the change in the average price of dairy products sold at auction, will be of key importance as the export of dairy products makes up a large part of the country’s exports and thus determines the demand for the NZD. A higher than expected increase will see the NZD strengthen as investors anticipate higher demand for the currency while a worse than expect figure will see the NZD sold off as demand dwindles and investors look to sell the currency.

 

17.01.2016 (uncertain) NZD GDT Price Index NZDUSD