U.S. Indices Sell-Off Deepens; ECB Policy Meeting Ahead!

The U.S. dollar was slightly lower against its major peers on Wednesday and early Thursday as the consumer prices increased at a smaller pace than expected in December. On year-over-year, the U.S. inflation rate picked up to 0.7%, the highest since December 2014, however, the market predicted a biggest growth up to 0.8%.In comparison with the month before, the consumer prices decreased by 0.1%.

Euro drops ahead of ECB meeting
The single currency slumped against its counterparts on Wednesday ahead of the European Central Bank policy meeting. Wednesday was quiet in terms of economic news in Eurozone. Today, no changes are expected to the interest rates, to the Quantitative Easing program or further easing measures, however, the general tone is expected to be dovish after the disappointing December meeting.

The EUR/USD pair found support on the 4-hour 100-SMA and rallied upwards on Thursday morning, and the bulls keep this momentum and push the price above 1.0940, we may see the price at 1.0970 soon. On the other hand, if the pair manage to break below the psychological level at 1.0900 and to penetrate through the three simple moving averages, 50, 100 and 200, is likely to drop at 1.0820.

UK jobless rate on 10-year low while wage growth below expectations
The sterling was traded mixed versus the G10-basket on the mixed data of the employment report. The UK jobless rate for the three months to November decreased at a 10-year low, 5.1% below expectations of 5.2%. The Claimant Count change for December revealed that the unemployed people declined by 4.3K while the wage growth slowed more than expected. The wages including bonus rose by 2.0% during the three months to November missing market’s forecast of 2.1% from 2.4% the month before.

The GBP/USD is in the track to deliver the fourth negative week and continues to be traded near 7-year lows. The pair is under heavy sell-off and dropped by 5.3% since the last week of December.
There are no any signals that the sharp sell-off is about to end. The next level to test to the downside is 1.4060. If the aforementioned level fails to support the pair the next level to watch is 1.3660.

U.S. Indices Sell-Off Deepens
The U.S. indices raise concerns as they continue to fall with small daily pauses as the oil continues to fall and the Earning Reports to disappoint. The Dow Jones Industrial Average plunged 249 points or 1.56% on Wednesday while the S&P500 fell 1.17%. Nasdaq suffered slight losses of 0.12. However, on the macro-view, all of the three indices lost near 10% in January.

The most blue-chip stocks ended sharply lower. The IBM’s stock (NYSE: IBM) was by far the biggest drag on Dow Jones. It is the worst performed constituent stock in DJIA, and declined near 5%, followed by Exxon Mobil Corporation (NYSE: XOM) that tumbled by 4.25%. It’s worth to notice that Goldman Sachs shares closed at the lowest level has been in nearly 3 years following its Earnings Report. The EPS was 4.68 marginally below market’s forecast of 4.69.

The biggest losers overall were the Real Estate and the Energy stock as the U.S. housing starts dropped by 2.5% in December and missed expectations to rise up to 1.200M, instead the number fell to 1.149M while the oil fell below $28 per barrel.

Economic Indicators
Today, the European Central Bank will decide about their interest rates. Even though not changes to the monetary policy are expected, the shared currency is expected to be affected as the meeting is followed by a press conference of the ECB president Mario Draghi.

The weekly U.S. jobless claims will be out as usual. In Eurozone, the preliminary consumer confidence is anticipated to decrease to -5.8 from -5.7, a disappointing development following the consecutive improvements of the previous two months. During the night, in Australia, the Westpac consumer confidence for January will be eyed.

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