Friday. The Institute for Supply Management said its Chicago Purchasing Managers' Index fell to 54.6 points in the reported month after rising to 57.6 in November, while market analysts anticipated a slight deceleration to 56.5. However, any reading above the 50 point-level indicates expansion in business activity. Three of the five barometer components decreased between November and December, whereas employment held steady and supplier deliveries grew modestly. The worse than expected result was mainly driven by a slump in new orders, which fell 6.7 points to 56.5. Despite December's decrease, the Q4 reading reached its two-year high. About 50% of respondents said they expect the new administration to bring positive changes and benefit their businesses, whereas 40% noted that they expect no changes and 9% of respondents project a decline in business activity. As a result, the EUR/USD pair jumped from 1.0529 ahead of the release to 1.0544, while the GBP/USD advanced from 1.2357 to 1.2377.
Americans became more optimistic about the economy in December since the postelection bump in confidence continues. As data suggest the US consumer confidence reached its highest in more than 15 years during the previous week as Americans expect more strength ahead in business conditions, stock prices and the job market following the election of Donald Trump as president in November. According to the Conference Board the Consumer Confidence Index advanced to 113.7 in December from an upwardly revised 109.4 in November. Meanwhile, the data topped estimates in a Reuters poll for a reading of 109.0. Another reason for the gain in confidence is surging optimism among older Americans. Economists follow confidence indicators because upbeat consumers are more likely to increase personal spending, which makes up most of the US economy.
Fundamental releases: Spanish manufacturing
A single event drove the fundamental side of the EUR/USD market on Monday morning, but did not spill in a lot of volatility due to the medium impact nature of the announcement. Spanish manufacturing came out at 8:15 and posted a positive surprise reading and had little to no impact on the exchange rate.
EUR/USD to break pattern
Daily Chart: Following a volatile session on Friday, EUR/USD entered this year with a small green candle on the morning session, testing the upper boundary of the most recent channel down. We will look for the pattern to most likely break, as it has now completed its purpose of leading the pair towards the bottom trend-line of the most senior channel. A decent target for Monday could be 1.0550, with more risk at 1.0580 if a steeper surge is extended. With downside risk limited by 1.0513, it is unlikely that the pair posts losses on today's trading session.Bullish sentiment persists
SWFX traders remain long on the pair, as 55% of open positions are long. Meanwhile, 60% of set up orders are to sell the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.051 by April
Traders, who were questioned on their longer-term views on EUR/USD between December 2 and January 2 expect, on average, the currency pair to trade around 1.0051 in early April. In addition, 28% (-4%) of participants believe the exchange rate will be generally above 1.08 in ninety days and 8% (-1%) see it above 1.14. Alongside, 35% (+2%) of those surveyed reckon the pair will trade below 1.02 in three months.