Daily Market Review — 04/12/2015
The Key NFP Report Is the Highlight of the Day
The highlight of yesterday’s trading session was the ECB Interest Rate Decision, as well as head regulator Mario Draghi’s press conference. The markets were disappointed by these two events. The deposit interest rate was reduced from –0.2% to –0.3%, the asset purchase program was extended to March 2017, while the main interest rate remained unchanged at 0.05%. Meanwhile, market participants expected to see the expansion of the volume of the quantitative easing program for at least another 15 billion Euros, but this didn’t happen. The European single currency showed a maximum one-day increase in the last seven years on this background. And yet, in the short term, the Euro will remain under pressure amid differences in the ECB’s and Fed’s monetary policies. Today some influence on the dynamics of the EUR/USD may have data on Factory Orders in Germany at 07:00 (GMT). With that, the main event of the day will be a key report on the US labor market, the NFP, which is traditionally scheduled for 13:30 (GMT).
Resistance: 1.0981, 1.1074, 1.1140
Support: 1.0894, 1.0826, 1.0747
The pair spent yesterday’s trading day in an upward momentum, which was caused by a publication of positive statistics on the UK Economy. Thus, according to yesterday published data, the PMI index in the services sector came out at 55.9, slightly higher than the average forecast at the level of 55.0. This indicator is quite important for the British Economy, since it services sector accounts for about two-thirds of GDP. In addition, yesterday’s rise in the Euro against all its rivals pulled up other European currencies. Today’s dynamics of the GBP/JPY will be affected by Labor Cash Earnings and Consumer Confidence in Japan, which were better than the average forecast of analysts. As to the British Economy, there is no important news to be published today, so the pair will follow the dynamics of the British currency against the US dollar.
Resistance: 185.95, 186.88, 187.48
Support: 184.32, 183.84, 183.16
The major stock exchanges in Europe ended yesterday’s session in the red, showing the largest decline since August, which was triggered by investors’ disappointment at the ECB meeting results. Recall that according to the results of yesterday’s meeting the deposit rate was reduced by 10 percentage points, the asset repurchase program was extended to March 2017, while the basic interest rate remained at the same level, and the amount of asset purchase program has not been increased. This largely disappointed investors who had expected more drastic measures. Today, the focus of investors will be on a report on NFP, which will help to assess the prospects of further steps the US Federal Reserve.
Resistance: 10781.12, 10864.71, 10993.76
Support: 10637.41, 10521.60, 10382.40
Quotes for the precious metal showed a positive trend yesterday, which was driven by significant Euro growth after the announcement of the outcome of the ECB meeting. Gold prices fell to six-year lows during early trading against the background of Fed Chairwoman Janet Yellen’s statement. She supported expectations of a rate hike in the United States at the next meeting, scheduled for December 15th – 16th. Meanwhile, investors are eagerly awaiting a report on the US labor market, which will be published later today. It is worth noting that this will be the last major report before the Fed meeting, where allegedly the regulator will take the first step towards tightening monetary policy. That is why today’s report will be of particular importance.
Resistance: 1065.38, 1073.91, 1080.66
Support: 1054.12, 1046.03, 1040.54