The dollar moved broadly lower against the other major currencies on Thursday, dropping more than 1%, after measures unveiled by the European Central Bank sent the euro sharply higher and as downbeat U.S. data dampened demand for the greenback.
The euro reached its highest level against the greenback since early-November, days before a robust U.S. jobs report bolstered the chances of a rate hike by the Fed for the first time in nearly a decade.
In testimony before the Joint Economic Committee on Capitol Hill, Yellen said the economy needs to add fewer than 100,000 jobs a month to absorb the losses of those who fell out of the labor market in recent years.
Later on, Federal Reserve Chair Janet Yellen strongly indicated to the Congress on Thursday afternoon that Fed policymakers are likely to vote to raise interest rates at its meeting in two weeks, barring any major shocks to the global economy. She said: “I currently judge that US economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market”.
Now all the focus is on today NFP. For the year, nonfarm payrolls have increased on average by more than 200,000 a month.
On Thursday the euro enjoyed its strongest one-day move against the dollar in more than six years, erasing all of its losses from last month’s swoon, as the European Central Bank sent an early Christmas gift to the single currency with a shocking monetary policy decision. In a widely unexpected move, the ECB’s governing council left several key interest rates unchanged and opted not to increase the pace of its €60 billion a month quantitative easing program. Instead, ECB president Mario Draghi unveiled only modest changes to the bond buying program, including a plan to extend it by six months through March 2017.
Hours later, Federal Reserve chair Janet Yellen made hawkish comments at a Congressional, hearing on the increasing likelihood that the U.S. central bank will raise short-term interest rates when it meets again in the middle of the month.
Today market participants are eyeing the highly-anticipated report on U.S. employment, due for this afternoon, for further indications on the strength of the labor market.
Support: 1.083; 1.076; 1.069
Resistance: 1.099; 1.109; 1.114
Scenario 1: Long positions above 1.083 with targets @ 1.099 & 1.109 in extension.
Scenario 2: Below 1.083 look for further downside with 1.076 & 1.069 as targets.
Comment: Technically the RSI is above its neutrality area at 50.
On Thursday gold rallied, as the dollar suffered one of its worst sessions of the year, after the European Central Bank sent shockwaves through global foreign exchange markets by instituting limited easing measures that fell far short of market expectations.
In a widely unexpected move, the ECB left several key interest rates unchanged and opted not to increase the pace of its €60 billion a month quantitative easing program. Instead, ECB president Mario Draghi unveiled only modest changes to the bond buying program, including a plan to extend it by six months through March 2017. The ECB also surprised investors by slashing its deposit facility rate by 10 basis points to minus-0.3%. Consensus estimates expected the central bank to cut the rate deeper into negative territory by at least 20 basis points to minus-0.4%.
Investors now turn their attention to Friday’s critical U.S. jobs report, which could pave the way for the Federal Reserve to raise short-term interest rates at a two-day meeting on December 1516.
Support: 1030; 1000; 970
Resistance: 1118; 1158; 1191
Scenario 1: Short positions below 1118 with targets @ 1030 & 1000 in extension.
Scenario 2: Short positions below 1118 with targets @ 1030 & 1000 in extension.
Comment: The RSI broke below a rising trend line. Gold is still capped by a declining trend line (since May 2013), which maintains a downside bias.
Crude oil surged on Thursday, bouncing off multi-year lows amid a sharply weaker dollar, ahead of perhaps the most contentious OPEC meeting in years. Although OPEC is largely expected to leave their production quota unchanged at today’s key meeting, the pressure is reportedly building on Saudi Arabia to slash output from near-record highs.
Any production cuts could tighten a wide supply-demand gulf worldwide that has persisted since OPEC resisted calls to slash output last November. As a result, crude prices have plummeted by more than 40%, amid a glut of oversupply on global markets.
Iran, meanwhile, is expected to resist any proposal that will force the Gulf state to cap output at 4 million bpd. Iran could ramp up production by as much as 1 million bpd over the next year, as Western Powers continue to ease economic sanctions related to this summer’s comprehensive nuclear deal.
So today investors’ focus will be on the OPEC meeting and on rig counts data that will be released in the U.S. from Baker Hughes Incorporated.
Support: 40.08; 39.6; 39.16
Resistance: 41.8; 42.24; 42.6
Scenario 1: Long positions above 40.08 with targets @ 41.8 & 42.24 in extension.
Scenario 2: Below 40.08 look for further downside with 39.6 & 39.16 as targets.
Comment: support base at 40.08 has formed and has allowed for a temporary stabilisation.
The S&P 500 suffered its biggest drop since late September on Thursday, as the European Central Bank disappointed market hopes for greater stimulus.
The ECB move triggered a spike in the euro that caught investors by surprise, forcing them to shift positions that hit most asset classes. Bond prices dropped after the announcement.
All 10 S&P 500 sectors fell, in a second day of sharp losses for U.S. stocks.
The Dow Jones industrial average fell 1.42% to 17,477.67, the S&P 500 lost 1.44% to 2,049.62 and the Nasdaq Composite dropped 1.67% to 5,037.53.
The S&P 500 posted its biggest daily percentage decline since September 28 and closed at its lowest since November 13.
Now all the eyes are on today’s NFP, for further indication on the US economy strength.
Support: 2019; 1953; 1867
Resistance: 2116; 2135; 2180
Scenario 1: Long positions above 2019 with targets @ 2116 & 2135 in extension.
Scenario 2: Below 2019 look for further downside with 1953 & 1867 as targets.
Comment: The RSI is mixed and calls for caution.