US import prices dropped markedly last month after two consecutive monthly gains, amid the lower cost of imported petroleum and stronger US Dollar. According to the US Department of Labor, import prices fell 0.3% in November, the biggest decline since February, following the previous month's downwardly revised gain of 0.4% and meeting analysts' expectations. On an annual basis, import prices decreased 0.1%, the smallest fall since July 2014, compared to October's drop of 0.3%. Last month's drop in import prices is unlikely to impact expectations that the Fed will raise rates at the end of its two-day policy meeting on Wednesday this week. The Greenback's surge and a plunge in oil prices between June 2014 and December 2015 dampened import price inflation. Imported petroleum prices declined 4.7% in November, the biggest drop since February, following the prior month's increase of 7.3% and offsetting a 10.6% rise in the price of imported natural gas. Excluding petroleum, import prices held steady last month, compared to October's 0.1% decline. The report also showed that export prices fell 0.1% in the same month, after climbing 0.2% in October. Yearover-year, they dropped 0.3% in November, the smallest decrease since August 2014, after dipping 1.0% on the same basis in October.
TThe Euro zone's employment growth slowed in the September quarter, official figures revealed on Tuesday. According to flash figures published by Eurostat, the number of employed persons climbed 0.2% in the Q3, down from the preceding quarter's gain of 0.4%, whereas economists expected an increase of 0.3%. However, there were 153.4 million employed in the region, the highest level since the Q4 of 2008. On a yearly basis, employment growth increased 1.2% in three months to September, following the prior quarter's 1.3% rise. Other data released on the same day showed German economic sentiment remained unchanged in December amid the looming banking crisis in Italy and upcoming elections in the Euro zone's largest economies The Mannheim-based ZEW Institute's Economic Sentiment Index came in at 13.8, unchanged from November, while market analysts anticipated a slight acceleration to 14.2. In addition, the figure was below its log-term average pf 24.0 points. Meanwhile, the Current Conditions Index advanced to 63.5 in December, indicating positive trends within the German economy, whereas markets expected the Index to hold steady at 58.8 in the reported month.
Upcoming fundamental releases: US retail sales; US PPI; US Crude oil inventories; FOMC statement; Federal funds rate
With a multitude of high impact fundamental data being released on Wednesday, markets are bound to be shaken up by surprise reactions, which could cause both false and credible breakouts of levels of significance. 13:30 GMT will bring US core retail sales, US retail sales and month on month PPI, while crude oil inventories come out at 15:30 GMT. Another time that is bound to bring uncertainty will be 19:00 GMT, when the Federal Funds rate, accompanied by the FOMC statement and projections and released and concluded with a press conference at 19:30 GMT.
EUR/USD distracted from downwave
Daily Chart: As expected, EUR/USD posted a red candle and created a long legged candle amid volatile intra-day movements. The pair opened Wednesday's session on a bullish note, testing the weekly Pivot Point at 1.0646. Considering the bearish nature of the current motion towards the bottom trend-line of the two-month channel, therefore we would expect the gains to be cut sometime soon in order to maintain the intended track. The next resistance lies at 1.0679 and support – at 1.0564, and based on the channel still being intact, we would expect a red candle today.Sentiment remains bullish
SWFX traders slightly upped their bullish sentiment to show 55% of all positions being long, compared to 54% on Tuesday. Pending orders, however, entered deeper pessimism with 64% (+1%) of commands being to sell the pair.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.0714 by the start of March
Traders, who were questioned on their longer-term views on EUR/USD between November 14 and December 14 expect, on average, the currency pair to trade around 1.0714 mid-March. In addition, 44% (-1%) of participants believe the exchange rate will be generally above 1.08 in ninety days and 7% (-2%) alone see it above 1.16. Alongside, 21% of those surveyed reckon the pair will trade below 1.02 in three months.