EURUSD: NFP on schedulePrevious week was full of macro data as well as Central bankers' decisions. Both Fed and ECB held their January meetings, making decisions on interest rates. The Fed held interest rates steady, while their European colleagues cut further interest rates by 25 bps. Both moves were expected by the market.
As Fed Chair Powell noted in an after-the meeting address to the public, the housing market in the US is slowly picking up. The house price index was up by 0,3% in November. Data published for new home sales in December show an increase of 3,6% on the monthly basis. The Durable goods Orders were down by -2,2% in December on the monthly basis, significantly higher from 0,5% expected by the market. The initial estimate for the GDP growth rate for Q4 currently stands at -0,2%. The GDP growth rate flash for Q4 was at 2,3% for the quarter, a bit lower from expected 2,6%. The PCE Price Index in December was standing at 0,3% for the month and 2,6% on a yearly basis, which was in line with market expectations. The core PCE remains a bit elevated at the level of 2,8% on a yearly basis. The personal income increased by 0,4% in December, while the personal spending was higher by 0,7% for the month.
The Ifo Business Climate in Germany in January was standing at 85,1 a bit higher from market estimate of 84,5. The GfK Consumer Confidence in February reached -22,4 in Germany, a bit higher from market consensus at -20. The initial estimate for the GDP growth rate for Q4 in Germany currently stands at -0,2%, while the same indicator stands at 0% in the EuroZone. Both figures were lower from forecasted figures. The Unemployment rate in the Euro Zone in December was standing at 6,3% and in line with the market estimate. The Retail sales in Germany in December was down by -1,6% for the month, significantly lower from forecasted 0,2%. The unemployment rate in Germany in January was 6,2% and was higher by 0,1 percentage point from the previous month. Inflation rate in Germany, preliminary for January was -0,2% for the month and 2,3% on a yearly basis.
A lot of important macro data and CB rate decisions were the promise for the volatile week on financial markets. The market pushed the eurusd currency pair to the level of 1,0530 at the start of the week, and swiftly reverted the path to the down side. The lowest weekly level was reached at Friday's trading session, at the level of 1,035. The RSI reached the level of 59 and in line with the market moves, reverted toward the downside, ending the week at the level of 46. Such moves are indicating that the market is still not sure which side to trade. The moving average of 50 days continues to modestly diverge from MA200. Considering a huge difference between two lines, the potential cross is still far away.
In the week ahead, the non-farm payrolls and unemployment rate for the US are scheduled, which might bring back some volatility to the market. As per current charts, the 1,05 resistance line was “rejected”, so the currency pair reverted back toward the 1,03, the short term support line. At the same time, RSI is showing that the market is not ready to take the trading side. The clear overbought market side was not reached during the previous period, but instead, market reverted to the downside. At the beginning of the week ahead, the situation should be much clearer. At this moment, on charts, there are equal probabilities for both moves, toward up, and downside. In case of the upside, the resistance line at 1,05 could be tested again. On the opposite side, the 1,03 level has equal chances to be tested in the week ahead.
Important news to watch during the week ahead are:
EUR: Inflation rate flash for January in the EuroZone, HCOB Composite PMI flash for January in Germany and in the EuroZone, Retail Sales in the Euro Zone in December, Balance of Trade for Germany in December, Industrial Production in December in Germany,
USD: ISM Manufacturing PMI for January, Jobs openings in December, ISM Services PMI in January, Non Farm Payrolls in January, Unemployment rate in January, Michigan Consumer Sentiment preliminary for February.
