Attention turns to ECB minutes & US payroll data
|EUR/USD => The pair rises to 1.02
FTSE => The index rises towards 7200
Gold => The commodity rises from 1730
EUR/USD fell to a fresh 20-year low in the previous session.
The USD strengthened across the board, and eurozone recession fears rose. The European Commission President Ursula de von Leyens warned that Russia could cut gas supplies to the region. Energy security has become a big concern in the eurozone after the German finance minister last week spoke of rationing gas supplies to The German industry if necessary. Given the slowing gas supply and surging energy prices, it’s difficult to see the euro area avoiding a recession.
Concerns of euro US dollar parity are also building owing to USD strength. The USD rose on safe-haven flows, given the huge amount of uncertainty in the market and on hawkish Fed bets. Today the pair is rising as attention turns to the minutes of the latest ECB meeting that will be released and could shed some light on how aggressive the ECB intends to raise rates.
|EZ retail sales
Ger. industrial production
|Actual: 0.2% (1.5%)
Expected: 0.4% (0.3%)
Where next for EURUSD?
After the EURUSD selloff sensed exhaustion at 1.0160, the pair is attempting a move higher, bringing the RSI out of oversold territory.
Any recovery needs to retake 1.02 and then 1.0350 to negate the near-term downtrend. A move over 1.06 is needed for a higher high. Sellers will be looking for a move below 1.0160 to extend the bearish trend to parity.
FTSE rises as Boris clings to power
The FTSE booked gains in the previous session and points to further gains on the open, boosted in part by a stronger close on Wall Street and the weaker pound.
Investors weigh up recession fears against relief that the slowdown in growth could force central banks to slow the pace of rate hikes. The FTSE is managing to rise despite the political uncertainty unfolding in London, where Borris Johnson clings to power despite 42 letters of resignation. Concerns are growing that he could call a snap general election, something the economy doesn’t need right now. House price data is expected to show 10.6% annual growth and could drive housebuilders.
Gold rises from a 2022 low.
Gold prices plunged to a 2022 low yesterday following the release of the latest FOMC meeting minutes.
The precious metal fell to 1730, a level last seen on September 21, on the prospect of a more hawkish Federal Reserve. The minutes revealed that the Fed believed high inflation should be tackled with high-interest rates. This wasn’t anything that the market hadn’t heard before, but it still lifted the USD. According to the CME Fedwatch tool, the probability of a 75 basis point rate hike has risen to 93%, hurting demand for non-yielding gold.
Today the precious metal is rising, helped by a softer USD. Attention now turns to ADP and jobless claims data for clues over the health of the US jobs market ahead of tomorrow’s non-farm payroll.
|US ISM services PMI
|Expected: 55.3 (0.6)
Expected: 200k (62k)
Support can be found at 1722 (September low) and 1700 (round number).
Resistance for the pair can be seen at 1772 (yesterday’s high) and 1786 (May low).