- SWFX market sentiment is 58% bullish
- Trader pending orders are 65% to sell
- Pair opened Thursday's session at 1.0533
- Economic events to watch over the next 24 hours: US CPI; US core CPI; Philly Fed Manufacturing Index; Unemployment claims
US retail sales rose modestly last month due to lower sales of motor vehicles, official figures revealed on Wednesday. According to the Commerce Department, retail sales advanced 0.1% in November, compared to the preceding month's downwardly revised gain of 0.6%, whereas analysts expected sales to grow 0.3%. Year-over-year, sales increased 3.8%. Excluding volatile items, core retail sales climbed 0.1%, following October's 0.6% rise and falling behind the 0.4% gain market forecast. Analysts suggest the US presidential elections had some degree of general impact on sales last month, as traditionally November marks the start of the important holiday shopping season. Separately, the Labor Department reported that its Producer Price Index grew 0.4% on a monthly basis in November, the biggest increase since June, after remaining unchanged last month. On a yearly basis, producer prices rose 1.3%, the largest gain since November 2014. In the meantime, the US Federal Reserve raised interest rates for the first time in a year. Also, Fed chairwoman Janet Yellen announced a 0.25% hike in the benchmark rate to 0.50-0.75%, and predicted three further rates increase in 2017.
The US unemployment rate fell to a nine-year low in November, adding to expectations that US interest rates will rise later this month. Figures from the Labor Department showed the US economy created 178,000 jobs in November, while the jobless rate fell to 4.6% from 4.9% in October. The first employment report since voters went to the polls last month shows an economy in strong shape as President-elect Donald Trump prepares to take office. The unemployment rate fell to levels not seen since August 2007, before a bubble in the U.S. housing market began to burst. The fall was driven partly by the creation of new jobs and partly by people retiring and otherwise leaving the labor force. In addition, average hourly earnings in the US fell more-than-expected last month touching a seasonally adjusted -0.1%, from 0.4% in the preceding month. The data release comes ahead of the Fed's meeting, when the central bank is expected to announce its first interest rate increase in a year.
Upcoming fundamental releases: US CPI; Philly Fed Manufacturing Index; Unemployment claims
Upcoming fundamental releases: US CPI; Philly Fed Manufacturing Index; Unemployment claims Fundamental data releases are bound to shake up the EUR/USD market on Thursday, as a set of both high and medium impact announcements are likely to at least somewhat surprise investors. While a set of medium impact European data will come out in the morning session until 9:00 GMT, we will eye markets closely at 13:30 GMT when the US CPI, core CPI, Philly Fed manufacturing index and unemployment claims come out. The French and German Flash manufacturing PMIs slightly topped analyst expectations Thursday morning, but failed to shake up the market significantly.
Dollar continues rate-hike surge
Daily Chart: EUR/USD dived beneath the bottom Bollinger Band amid a continuation of the senior two-month descending channel, in which the rate is now targeting the bottom trend-line. The boundary lies at 1.0325 and is likely to come into play some other session rather than this one. Immediate support is set at 1.0419 and is currently the only level that serves as an obstacle to the ultimate target. We consider the resistance of 1.0532/50 to be one of significance, and unlikely to let the rate through. Based on the bearish continuation, we stand in favour of a red candle at closing time.Daily chart
Hourly chart: The hourly chart confirms the gloomy outlook for EUR/USD with a dive below the significant 1.0550 level and a resistance set at 1.0520. The pair is currently testing the December 15 support level at 1.0486 and we expect it to dive below, opening the way for 1.0419, the weekly Pivot Point and the bottom Bollinger Band at 1.0414. SMAs putting bearish pressures from above will facilitate the movement north.
Hourly chart
Sentiment remains bullish
SWFX traders upped their bullish sentiment to show 58% of all positions being long, compared to 53% on Tuesday. Pending orders, however, entered deeper pessimism with 65% (+1%) of shorts.
OANDA traders improved their bullish outlook, as 60.21% of open EUR/USD positions were long on Thursday morning, compared to 57.81% on Wednesday. Additionally, SAXO Bank clients have entered a slightly optimistic territory with 51.15% of all positions being bought, compared to 45.97% on the previous trading session.