Consumer spending in the United Sates advanced more than expected last month as households boosted purchases of motor vehicles and services amid increasing wages. On Monday, the Commerce Department reported consumer spending rose 0.5% in December, following the preceding month's 0.2% rise and surpassing a 0.4% increase forecast. The stronger than expected figure pointed to solid domestic demand that is expected to boost economic growth in early 2017. Data showed purchases of manufactured durable goods climbed 1.4% last month, while consumer spending on services jumped 0.4%. Meanwhile, personal income increased 0.3% month-over-month in December after rising 0.1% in the prior month. However, economists expected household income to climb 0.4%. Salaries and wages grew 0.4% in December after dropping 0.1% in November. For all of 2016, income climbed 3.5% after increasing 4.4% in 2015.
Separately, the Commerce Department said the PCE Price Index advanced 0.2% in December, following November's 0.1% increase. During the twelve-month period ending December, the Index rose 1.6%, the largest increase since September 2014, up from the previous month's 1.4% rise. Excluding volatile items, the Core PCE Index grew 0.1% after being unchanged in November, in line with analysts' expectations.
Upcoming events: US data and FOMC
Wednesday is set to be a busy day for fundamentals in the US, as various data releases are scheduled for today. At 13:15 GMT the US ADP Non-Farm Employment Change is set to be published. Afterwards, at 15:00 GMT US ISM Manufacturing PMI will be out. Last but most important data will come at 19:00 GMT. At that time the FOMC Statement and Federal Funds Rate will be released to the public.
EUR/USD hits long term resistance
Daily Chart: During the early hours of Wednesday's trading session the common European currency was still in a retreat against the US Dollar. The retreat began on Tuesday, as the currency exchange rate hit the upper trend line of the long term descending channel, in which the pair has been trading since the end of March. In addition, on Wednesday morning just below the trend line the 100-day SMA at 1.0797 is keeping the pair lower. It is most likely that the rate will retreat back to the weekly R1, which is located at 1.0761.At this rate it will be oversold soon
SWFX traders continue to be bearish regarding the pair, as 57% of trader open positions are short on Wednesday. In the meantime, 59% of trader set up orders are set up to sell the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.06 in May
Traders, who were questioned on their longer-term views on EUR/USD between January 1 and February 1 expect, on average, the currency pair to trade around 1.06 by the start of May. In general, 51% (-1%) of participants believe the exchange rate will be generally below 1.06 in ninety days, and 24% (-1%) see it below 1.02. In the meantime, 16% of those surveyed reckon the pair will trade above 1.12 in three months.