Yesterday’s trade saw EUR/USD within the range of 1.0849-1.0917. The pair closed at 1.0902, going up 0.28% on a daily basis. It has been the 8th gain in the past 18 trading days and also a third consecutive one. The daily high has been the highest level since January 21st, when a high of 1.0922 was registered.
At 7:22 GMT today EUR/USD was losing 0.26% for the day to trade at 1.0874. The pair touched a daily high at 1.0908 during the early hours of the Asian trading session, making an exact test of the daily R1 level, and a daily low at 1.0870 at 7:10 GMT.
On Thursday EUR/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
Euro area
Economic Sentiment Index (ESI)
The final value of the consumer confidence index probably confirmed the preliminary reading in January, coming in at -6.3. The final index for December was reported at -5.7, confirming the preliminary reading. The latter has been the highest level of confidence since June 2015, when the index stood at -5.6. The indicator measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro area. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).
The ESI probably slipped to 106.4 in January, according to expectations, from a reading of 106.8 in December. The latter has been the highest index level since March 2011, when a value of 107.3 was reported. The Economic Sentiment Indicator (ESI) is a composite indicator, consisting of five sectoral confidence indicators with different weights: Industrial confidence indicator, Services confidence indicator, Consumer confidence indicator, Construction confidence indicator and Retail trade confidence indicator. The ESI is calculated as an index with a mean value of 100.0 and standard deviation of 10 over a fixed standardized sample period.
Higher consumer confidence usually implies a greater willingness to spend, including large-ticket purchases, while consumer spending is a key factor behind economic growth. Therefore, in case either the ESI, or the consumer confidence indicator exceeded expectations, this would cause a moderate bullish impact on the euro. The European Commission is expected to release the official ESI reading at 10:00 GMT.
Germany – Consumer price inflation (preliminary estimate)
German preliminary annualized consumer inflation probably accelerated to 0.5% during January, according to the median forecast by analysts, from a final rate of 0.3% in December. If expectations were met, Januarys CPI inflation would be the highest since May 2015, when it was recorded at 0.7%.
Energy costs went down 6.5% year-on-year in December, as prices of heating oil plunged 23.3% and prices of motor fuels dropped 7.5%. Prices of other energy products were also down, namely charges for central and district heating (-9.2% year-on-year). On the other hand, prices of food and non-alcoholic beverages rose 1.1% year-on-year in December, according to the report by Destatis, following a 1.8% surge in November. Last month prices of goods as a whole slumped 0.6%, or at the same rate as in November, while cost of services was up 1.2% in December.
The nations preliminary annualized Consumer Price Index, evaluated in accordance with the harmonized methodology, probably rose 0.5% in January, according to market expectations. If so, Januarys rate would be the highest since May 2015. In December annual harmonized consumer inflation was registered at a final 0.2%, which came in line with the preliminary estimate reported on January 4th. The harmonized methodology is used for the sake of consumer inflation comparison in an international context (member states in the Euro area).
In case the annualized general CPI accelerated more than expected and came a step closer to the 2-percent inflation objective, set by the European Central Bank, this would have a moderate-to-strong bullish effect on the euro, as it would imply that ECBs accommodative monetary policy has begun to work in favor of economic activity. Destatis is scheduled to release the preliminary CPI report at 13:00 GMT.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on January 22nd, probably dropped to 282 000, according to market expectations, from 293 000 reported in the preceding week. The latter has been the highest number of claims since the week ended on July 3rd 2015, when 297 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 285 000, marking an increase by 6 500 compared to the preceding weeks revised down average.
The business week, which ended on January 15th has been the 45th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably increased to the seasonally adjusted 2 217 000 during the business week ended on January 15th from 2 208 000 in the preceding week. The latter has been the lowest number of claims since the business week ended on December 18th 2015. The figure also represented a decrease by 56 000 compared to the revised up number of claims reported in the week ended on January 1st. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 13:30 GMT.
Durable Goods Orders
Durable goods orders in the United States probably dropped 0.6% in December from a month ago, according to the median forecast by experts, after remaining flat in November.
New orders for manufactured durable goods were up USD 0.1 billion in November, or almost unchanged at USD 238.8 billion. The value of shipments of manufactured durable goods, up in two of the past three months, rose 0.9% (or USD 2.1 billion) in November to reach USD 241.8 billion. The value of unfilled orders for manufactured durable goods, up in two consecutive months, rose 0.2% (or USD 1.9 billion) in November to reach USD 1,194.0 billion. At the same time, the value of inventories of manufactured durable goods, down in six of the past seven months, dropped 0.3% (or USD 1.1 billion) during the period to USD 395.7 billion, according to data by the US Census Bureau.
Non-defense new orders for capital goods shrank 6.3% in November to USD 77.2 billion, while defense new orders for capital goods expanded 44.4% to USD 14.1 billion.
Durable goods orders, which exclude transportation, probably shrank 0.1% in December from a month ago, according to expectations, following another 0.1% drop in November. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.
In case the general index fell at a faster-than-projected pace, this would have a strong bearish effect on the US dollar, due to negative implications in regard to the wider gauge of production, factory orders. The US Census Bureau is scheduled to release the official report at 13:30 GMT.
Pending Home Sales
The index of pending home sales in the United States probably rose 0.8% in December, according to the median estimate by experts. If so, this would be the sharpest monthly increase since May 2015, when sales went up 0.9%. In November pending home sales unexpectedly fell 0.9%.
In annual terms, the index of pending home sales advanced 2.7% in November, which has been a 15th consecutive month of increase. However, Novembers rate of sales growth has been the slowest since October 2014, when sales were up 2.2%.
In case pending home sales increased at a faster pace than anticipated, this would have a moderate bullish effect on the US dollar. The National Association of Realtor’s (NAR) will report on the official index performance at 15:00 GMT.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.0908
R2 – 1.0914
R3 (range resistance) – 1.0921
R4 (range breakout) – 1.0939
S1 – 1.0896
S2 – 1.0890
S3 (range support) – 1.0883
S4 (range breakout) – 1.0865
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0851
R1 – 1.0924
R2 – 1.1052
R3 – 1.1125
S1 – 1.0723
S2 – 1.0650
S3 – 1.0522
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