AUD/USD: 0.8905EUR/USD: 1.3575The Euro was heavy for most of the session, ahead of the release of the FOMC minutes, and fell to its lows in NY after the release of the better than expected ADP private sector employment data, which rose by 238K in Dec, easily surpassing expectations of a rise of 200K. November’s figure was revised up to + 229K from +215K. US Treasuries traded back at 3.00% ahead of the release of the minutes and the dollar was reasonably underpinned against most currencies.
Earlier in the day, the EU data had little effect, when the EU unemployment data came in as expected at 12.1%, unchanged from the previous month, although the EU retail sales rose much more than expected, by 1.4% m/m in November (exp 0.2%), the fastest pace in 12 years. Later on today the ECB will have its monthly meeting at which no change is expected, but the market will be hanging on to every word of Mario Draghi’s press conference.
The release of the minutes did not set the world alight as far as the markets were concerned, with the Fed suggesting that they see some improvement in labor market although a few Fed members want a lower threshold, but they also see diminishing benefits in the ongoing bond purchase programme and suggested favouring QE tapering in measured steps.
The Euro is currently testing the 1.3560 support level where the daily cloud top and the rising trend line currently provide support. Below this would head into further decent support at 1.3545/25 area (100 DMA, 61.8% of 1.3294/1.3892,) ahead of 1.3500. Further out, 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and 1.3435 (76.4% of 1.3294/1.3892) will see further buyers, albeit that this appears some way off.
On the topside, 1.3600 will now see sellers ahead of 1.3630 (23.6% of 1.3892/1.3553). It does not look like we are going much above here today and the indicators generally still point lower. As with the weekend outlook, I still think that being long dollars is the way to go, but keep an eye out for the ECB later on today. Any spike higher after the press conference may well provide another sell opportunity.
Economic data highlights will include:
EU Consumer/Industrial Confidence, Business Climate, German Industrial Production, ECB I/R Decision, Press Conference, US Jobless Claims
