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Thursday, January 4th
The EUR/USD pair remains better bid this Thursday, having bounced off the resistance level of 1.2000 during Asian trades, on the back of renewed weakness in the US dollar. Seems that markets have already digested yesterday’s slightly hawkish FOMC meeting minutes. Yesterday's FOMC protocols showed broadly that the Bank left its inflation projections broadly unchanged, however, considering three more interest rate hikes this year, which was generally perceived by the market as the "hawkish" outcome of the last Fed meeting. However, further growth of the pair looks limited, as hawkish Fed minutes sparked fresh speculations on divergence between Fed and ECB monetary policies, which in turn exerts some bearish pressure on the pair. Moreover, it is expected that further downside correction may happen soon, as markets believe that pre-New Year rebalancing of US dollar positions could be over. On the data front, the EU economic calendar will remain broadly silent this Thursday, while the US will offer traders data from the labor market. However, expected that today’s US data won’t trigger sharp market moves, as investors remain in anticipation of the key jobs report, which will be published tomorrow.
The GBP/USD pair regained positive traction after facing resistance near the level of 1.3500. Yesterday the pair came under strong selling pressure, losing more than a cent, following dismal results of the UK construction PMI repot. Adding to this, mildly hawkish Fed minutes also added some bearish pressure to the pair yesterday, thus accelerating its downside slide. However, the pair managed to recover its upbeat mood in Asia mainly on the back of increased demand for higher-yielding assets, triggered by positive Chinese services PMI data, which provided some support to risky pound. Today the economic data calendar will offer investors the UK service PMI report and data from the US labor market, which will bring fresh trading opportunities during this Thursday.
The AUD/USD pair continues to stay positive for the twelfth consecutive session, having once again refreshed its 11-week highs at 0.7857 spot. Seems that the US dollar failed to benefit from hawkish FOMC minutes and retreated against its major rivals, losing yesterday recovered points. One of the main driving factors for the pair remains slightly increased risk appetite, additionally heated by upbeat Chinese data, which positively affected higher-yielding Aussie. Moreover, bullish dynamics of the commodity market also contributes to the positive rally of the pair. Looking ahead, today all investors’ attention will remain glued to the US ADP employment data, which is often considered by markets as preliminary indicator of the main US jobs report.
The USD/JPY pair changed its direction during Asia and now is navigating southward despite decreased demand for non-risky assets. Seems that market participants have passed over more hawkish protocols from the last Fed meeting, thus allowing US bears to regain control over the market. Yesterday’s FOMC minutes showed Bank’s intention to maintain more aggressive monetary policy path, with the first rate hike expected in March 2018. Adding to this, ongoing geopolitical tensions around N.Korea, additionally boosted by comments from Japanese PM Sh.Abe on North Korean nuke threats, and upcoming crucial US jobs data may return demand for safety to the market, which in turn will support the yen. Today all traders’ attention will remain focused on the US data from ADP, while US dollar dynamics will continue to navigate the pair throughout this Thursday.
Major events of the day:
UK Services PMI – 11.30 (GMT +2)
US ADP Nonfarm Employment Change – 15.15 (GMT +2)
Crude Oil Inventories – 18.00 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1961 R. 1.2091
USDJPY S. 111.99 R. 112.85
GBPUSD S. 1.3421 R. 1.3659
USDCHF S. 0.9669 R. 0.9847
AUDUSD S. 0.7789 R. 0.7867
NZDUSD S. 0.7052 R. 0.7128
USDCAD S. 1.2474 R. 1.2584
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