Daily Market Review — 07/01/2016
Eurozone’s Statistics Will Drive Markets Today
The US dollar fell against the Euro during yesterday’s session, caused by the publication of the FOMC Meeting Minutes. The Meeting Minutes outlined the fact that some Fed officials are concerned about low inflation, with current levels not increasing for more than three years now. The ADP Employment Report for the US, which came out yesterday at 257,000 against an average forecast at 192,000, also had some impact on the dynamics of trading. However, even though the Services PMI and ISM Non-Manufacturing Index showed moderate growth, they both fell short in regards to predicted values. Today’s dynamics of the EUR/USD may be significantly influenced by publication of data on Retail Sales and Factory Orders in Germany at 07:00 (GMT), as well as by the same indicators for the Eurozone and its Unemployment Rate, scheduled for 10:00 (GMT). As to US data that could have an impact on the dynamics of the pair, pay attention to the traditional report on the US labor market at 13:30 (GMT). It should be noted that the government report on the labor market, Non-Farm Payrolls Report, will be released this Friday and set the direction of the pair in the mid-term.
Resistance: 1.0837, 1.0898, 1.0945
Support: 1.0780, 1.0709, 1.0638
The pair has been in a moderate downtrend since the beginning of this year. This is caused, primarily, by the negative statistics on the Chinese economy, which have had a huge impact on the exchange rate of the Australian dollar. According to published statistics, both Services and Manufacturing PMI’s were much lower than the average forecast of analysts, which triggered a massive sell-off in the Chinese stock market amid fears over a slowdown in the world’s second largest economy. Recall that China is the largest consumer of commodities, which, in turn, accounts for the lion’s share of Australian exports. Meanwhile, the Australian currency was pressured yesterday by relatively neutral data on the US Economy. Data on Australia’s Building Permits and Trade Balance also had some influence today. Both indicators were slightly below forecasts. Today’s dynamics of the AUD/USD will depend on the general sentiment in commodity markets, as well as on the publication of a labor market report in the US. It is worth adding that market participants are expecting Friday’s NFP report, which will determine the strength of the US labor market.
Resistance: 0.7051, 0.7095, 0.7154
Support: 0.7023, 0.6979, 0.6935
Major European Stock Markets traded in the negative yesterday, showing a trend caused by another collapse of oil prices. Oil quotations turned to a downward trend against the background of concerns about the oversupply of this raw material in the world market. Geopolitical tensions in the Middle East and in Asia, where North Korea conducted another test of the H-Bomb, also had a huge negative impact on investor sentiment. However, the Services PMI’s in France, Germany and the Eurozone, which were slightly above the average forecast, had some positive impact on the dynamics of yesterday’s trading. Today’s dynamics of trading may be influenced by data on Retail Sales and Factory Orders in Germany and the Eurozone. Meanwhile, investors will be focused on geopolitical risks and the situation with the Chinese economy, where the trading on stock markets was suspended today after stocks fell by more than 10%.
Resistance: 10208.03, 10397.13, 10510.65
Support: 10092.14, 10014.08, 9908.82
Quotes of the precious metal continued yesterday’s rise on the background of increasing investments in gold as a safe asset. This is caused by the continuing conflict between Saudi Arabia and Iran. Moreover, North Korea officially confirmed the successful testing of nuclear weapons yesterday. In addition, its representatives said they do not intend to reduce nuclear capability as long as the United States carry out a hostile policy towards it. Data on the US labor market, which went far above the average forecast, also had some impact on the market. Meanwhile, gold price rose today amid the suspension of trading on the stock exchanges in China because of the sharp fall in stock prices. However, besides all these negative factors, the dynamics of today’s trading may be affected by data on the US labor market, scheduled for 13:30 (GMT).
Resistance: 1102.58, 1114.16, 1132.16
Support: 1094.99, 1086.41, 1072.30