- SWFX sentiment is bearish in 54% of all cases (55% yesterday and 56% on Friday)
- More orders are now placed to go long on the Euro within 50 and 100 pips from the spot
- Markets focus on second part of this week when important US employment data is due
- On a daily basis technical indicators are mostly sending positive signals right now
- Economic events to watch over the next 24 hours: Swedish Retail Sales (Feb); FOMC Members Williams and Kaplan Speak; Fed Chair Yellen Speaks; US Consumer Confidence (Mar)
US economic growth slowed less than expected in the fourth quarter, with somewhat strong consumer spending offsetting the attempts by businesses to lower an inventory overhang. US gross domestic product rose at a 1.4% annual rate compared with the previously reported 1% pace, according to the Commerce Department. The economic growth revision shows better consumer spending on services and reinforces the view that the domestic economy is on a stable footing and continues to grow. Consumer spending, which accounts for more than two thirds of US economic output, surged 2.4%, compared with the 2.0% rate reported last month. However, declining profits and weak business investment reflect overseas uncertainty has hit manufacturers, energy firms and financial markets. First quarter estimates are around a 1.5% rate, with the risks to growth are tilted to the downside. Meanwhile, the PCE data came out lower than predicted, taking pressure off the Fed to resume interest rate increases. The price index for personal consumption climbed 0.1% last month. The core measure increased 1.7% over the past 12 months. In addition to that, consumer outlays edged a mere 0.1%, compared with a 0.2% expected by economists. A separate report showed the pending home sales index advanced 3.5% to 109.1 points in February, the highest since July.
New orders for long-lasting US manufactured goods dropped in February for the third time in four months, as the sector continued to struggle with the lingering effects of a strong US Dollar and lower oil prices. Bookings for goods meant to last at least three years plunged 2.8%, following the 4.2% gain, the Commerce Department reported. Categories reflecting business investment were broadly sluggish, indicating that American companies remain cautious about spending. New orders for nondefense capital goods excluding aircraft, a proxy for business spending on equipment, dropped 1.8% in February after a 3.1% increase in January. Meanwhile, a separate report of the Labor Department showed the number of Americans applying for unemployment benefits climbed modestly last week, while revisions for prior weeks indicated the labour market was much stronger than previously estimated. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 265,000 for the week ended March 19. The prior week's claims were revised to show 6,000 fewer applications received than previously reported. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, nudged up 250 to 259,750 last week.
Upcoming fundamentals: Three Fed presidents to speak on Tuesday
At 10:15 GMT the San Francisco Fed president John Williams, who is a voting FOMC member in 2016, is going to give a speech in Singapore. Last week he had been famous for expressing quite hawkish views on the matter of Fed's interest rate policy, along with his colleague from St. Louis Fed James Bullard. Meanwhile, Dallas Fed chief Robert Kaplan is going participate in a panel discussion at the Austin Chamber of Commerce in Texas at 18:00 GMT today. He is going to vote for monetary policy decisions in 2017. In the meantime, the most important speech of the day will be given by the Fed Chair Janet Yellen. Speaking at the Economic Club of New York, she will talk exactly about economic outlook and monetary policy. Markets are looking for her reaction to hawkish views expressed by aforementioned FOMC members, especially in the wake of dovish policy stance taken at the March Fed meeting.
EUR/USD takes a break near 1.12
Weak US personal spending data helped the EUR/USD cross to add value on Monday, as it closed below 1.12 after testing the 23.6% Fibonacci retracement of the March 2016 uptrend at 1.1220. The cap is being provided by the weekly pivot point at 1.1197, but bullish daily and weekly technical indicators raise hopes that the common currency will breach its initial resistance area today. A failure here should diminish the pair's optimism. We see the 1.1060/40 zone as a vital support, where 55/200-day SMAs are joined by the March 16 low.Daily chart
For a fifth consecutive trading day EUR/USD is trading between the two-month downtrend and the 200-hour SMA. Therefore, based on the one-hour chart our expectations are mixed. We are awaiting further confirmations from either side of the market. By consolidating above 1.1219, namely the moving average, EUR/USD will set eye on the September high of the previous year at 1.1459. Alongside, inability of the aforementioned downtrend to contain losses may result in an extended slide towards 1.0850.
Hourly chart
Bullish side of SWFX market registers continuous improvement
Even though as many as three percent of OANDA traders have changed hands during trading time on Monday, EUR/USD's sentiment there continues to be the worst among major currency pairs. Nonetheless, we should admit the fact that the bullish share has improved very substantially in recent times to reach the 46.5% mark by March 29. On the other hand, SAXO Bank clients have gone deeper into red on the Euro, as two thirds of them are now betting on this currency's plunge versus the Buck.