Daily Market Review — 03/12/2015
Main Events of the Day – ECB Interest Rate Decision & Mario Draghi’s Press Conference
The Consumer Price Index in the Eurozone, which was published yesterday, didn’t meet analysts’ expectations with inflation in the region not growing. According to data, the CPI rate has not changed compared to the previous year and came out at 0.1% against a forecast of 0.2%. The CPI, excluding food and energy unexpectedly fell to 0.9 with an average forecast of 1.0–1.1%. Such disappointing data has pushed the European single currency down across a wide range of currency pairs. However, the market reaction was short, since market participants have already priced their expectations that the ECB will expand its stimulus measures today. The announcement ECB meeting results and Mario Draghi’s press conference will be the main events of the day and are scheduled for 12:45 (GMT) and 13:30 (GMT), respectively. Analysts increased the probability of expansion incentives in the form of increasing the volume of the quantitative easing program or lowering deposit rates several times after a disastrous report yesterday. If the ECB make the decision, the European currency is expected to further decline.
Resistance: 130.96, 131.56, 132.20
Support: 130.33, 129.66, 128.96
The GBP/USD spent yesterday’s trading session in a downward trend, which was triggered by several negative statistic reports on the UK Economy. Thus, according to data released yesterday, the PMI Construction Index was at 55.3 against the average forecast of 58.2, indicating the pace of growth in the sector is slowing down. Such data disappointed market participants, which resulted in the sell-off of British currency against the US dollar. Meanwhile, yesterday’s US data could not please those who favor the dollar. The ADP Employment Report showed that the number of those employed rose to 217,000 against the average forecast of analysts at the level of 190,000. In addition, yesterday’s speech by the Fed members Lockhart and Yellen increased investors’ confidence that the regulator will increase rates at the meeting on December 15th – 16th. Today’s pair dynamics will be affected by the Purchasing Manager Index in Services in the UK, which accounts for over 2/3 of British GDP. This indicator will be released at 09:30 (GMT). Meanwhile, it is also worth paying attention to the publication of data on the US labor market at 13:30 (GMT) and the speeches of Janet Yellen and Stanley Fischer later today. Do not forget the most important report of the week is the NFP, and will be published tomorrow.
Resistance: 1.4992, 1.5051, 1.5122
Support: 1.4894, 1.4808, 1.4747
Major US stock markets were put under pressure in yesterday’s trading session amid Fed Chairman Janet Yellen and its member Lockhart’s speeches. During their speeches, Fed officials confirmed their commitment to a tight monetary policy. They also noted that the final decision was not made, and will depend on economic data, which will be released before the meeting. Investors were focused yesterday on ADP Employment Report. It showed the number of employees rose to 217,000 against an average forecast of 190,000. The probability of monetary tightening is putting pressure on stock markets, as the cost of corporate borrowing will be increased and may not become profitable for investors.
Resistance: 2093.90, 2104.26, 2109.09
Support: 2075.96, 2064.23, 2044.56
Light Sweet Crude Oil Futures
“Black Gold” quotes fell in yesterday’s session by more than 2%, updating its 2015 minimums at $39.81 per barrel. Such a strong decline was caused by the publication of data on Crude Oil Stocks by the US Department of Energy. According to the data, inventories rose last week by 1.17 million barrels per day. Recall, a similar report was released by API on Tuesday, which showed inventories increased by 1.6 million barrels per day. In addition, pressure comes from expectations of OPEC meeting to be held in Vienna on 4th December. It is worth noting that its members will discuss production quotas. Meanwhile, the oversupply in the world market will continue to put pressure on oil prices.
Resistance: 41.11, 42.20, 43.20
Support: 39.81, 39.00, 37.00