A couple of months ago, it was hard to think EURUSD to push 1.15 levels, but it is reality due to the continuous US fundamental disappointment. It was all about unemployment claims, US PPI data and Mario Draghi’s speech at the IMF yesterday. As a continuation of the retail sales disappointment from the previous day USD rapidly plunged against its counterparts, while precious metals had a strong upward rally. By the NY opening positive unemployment claims gave a boost to the USD, but the momentum was not strong enough. Today is Friday, also known as FRYday. Nevertheless, we will be following the market closely to see whether or not yesterday’s trend stalls.
What is significant about yesterday’s market was that, big banks all announced their targets for EURUSD, which was achieved. But what came after was the main event, as EURUSD made the high of 1.1443 everyone started weigh on long entries, expecting the pair hit the main target or 1.1480. However as usual market did what it is good at, and cleared out all the weak stops. Mario Draghi’s IMF speech was the main end of the day catalyst for EURUSD. The ECB president commented the following in his speech:
- QE TO LAST UNTIL SUSTAINED ADJUSTMENT IN INFLATION
- ECB TO IMPLEMENT QE PROGRAM `IN FULL’
- ECB UNCONVENTIONAL MEASURES HAVE BEEN `POTENT’ SO FAR
- STRONG HEADWINDS FOR INFLATION PERSIST
A key take away from Draghi’s speech: ECB is happy with their QE results. ECB’s decisions are highly dependent on inflation levels just like most of the other major industrialized nations.
Cable also added more into its steam and managed to jump just above 1.58 zone, before crumbling back to 1.5770 zone.
Gold meanwhile had the most major market movement, the yellow metal broke above its long lasting sideline channel and tested 1227 zone. This level was specifically important as our 200 day moving average was just on 1220 zone.
Today’s fundamentals and expectations
The most important and the most anticipated fundamental development of today is going to be the Univeristy of Michigan Consumer Sentiment index. With this index generally USD pairs have a rally of 50-60 pips. Investors are expecting just 0.1% decline. Any disappointment will weigh more on the USD pairs.
|1:30pm||CAD||Manufacturing Sales m/m||1.20%||-1.70%|
|1:30pm||CAD||Foreign Securities Purchases||7.23B||9.27B|
|1:30pm||USD||Empire State Manufacturing Index||5.1||-1.2|
|2:15pm||USD||Capacity Utilization Rate||78.40%||78.40%|
|2:15pm||USD||Industrial Production m/m||0.10%||-0.60%|
|3:00pm||USD||Prelim UoM Consumer Sentiment||95.8||95.9|