EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR declined 0.42% against the USD and closed at 1.0602.
In economic news, data indicated that the Euro-zone’s flash consumer price index (CPI) climbed to its highest level since April 2014, after it rose 0.6% on an annual basis in November, at par with market expectations, providing some relief for the European Central Bank (ECB), as it is scheduled to meet next week to decide whether to announce an extension to its stimulus measures to lift growth and inflation in the common currency region. The CPI had recorded a rise of 0.5% in the prior month.
Additionally, Germany’s seasonally adjusted unemployment rate remained steady at a record low of 6.0% in November, meeting market consensus and following a similar rise in the preceding month. Moreover, the nation’s retail sales rebounded more-than-expected by 2.4% MoM in October, reaching its highest level in five-years, thus suggesting that private consumption will boost growth in the Euro-zone’s powerhouse economy in the fourth quarter. In the prior month, retail sales had fallen by a revised 1.5%, while investors had envisaged for a gain of 1.0%.
The US Dollar gained ground against its key counterparts, after better-than-expected jobs data underpinned expectations that the Federal Reserve (Fed) would raise interest rates next month.
Data indicated that ADP’s private sector employment climbed by 216.0K in November, recording its biggest increase since June 2016, compared to market anticipations of an advance of 170.0K and following a revised increase of 119.0K in the previous month. Additionally, the nation’s personal income increased at the fastest clip in six months, after it rose more-than-projected by 0.6% in October and following a revised gain of 0.4% in the previous month. Also, personal spending advanced less-than-estimated by 0.3% in October, compared to a revised advance of 0.7% in the previous month. Further, the nation’s Chicago Fed purchasing managers’ index jumped to a level of 57.6 in November, posting its strongest reading since January 2015, and against a reading of 50.6 in the prior month. Moreover, the nation’s pending home sales rose 0.1% on a monthly basis in October, compared to a revised advance of 1.4% in the prior month.
Separately, the Fed’s Beige Book report showed that activity in most of the districts continued to expand at a modest to moderate pace from early October through mid-November, although the pace varied. The report further stated that the US labour market appeared to tighten in a majority of districts, with continued expansion in employment accompanied by generally modest wage growth and acknowledged the strong greenback was weighing on manufacturers.
Meanwhile, the Dallas Fed President Robert Kaplan, advocated for an interest rate hike in the near future, while the Cleveland Fed President Loretta Mester noted that raising interest rates in the near-term would be a “prudent step”.
In the Asian session, at GMT0400, the pair is trading at 1.0599, with the EUR trading marginally lower against the USD from yesterday’s close.
The pair is expected to find support at 1.0545, and a fall through could take it to the next support level of 1.0490. The pair is expected to find its first resistance at 1.0660, and a rise through could take it to the next resistance level of 1.0720.
Moving ahead, investors would look forward to the Euro-zone’s unemployment rate for October along with the final Markit manufacturing PMI for November across the Euro-zone. Moreover, in the US, the ISM and Markit manufacturing PMIs for November, construction spending for October and weekly initial jobless claims, all scheduled to release later today, would garner a significant amount of market attention.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
