EURUSD spiked up to 1.1985 from 1.1935 after ECB minutes said the Bank could change its guidance in early 2018 if the EU economy continues to expand. The pairing had been fairly steady through the London morning session. However, after ECB, US data driven EURUSD even higher, to 1.2035, with the dollar slipping, following the cooler headline and core PPI figures, and the higher than expected jobless claims. Hence the rebound on ECB and on US Data, driven the pair to break the Daily Resistance at 1.2000, with the next immediate resistance coming at 1.2060. A failure of reaching and holding above the R2, will triggered a return back lower to the Daily PP level.
The minutes for the last ECB meeting confirmed that central bankers agree on a very gradual change in the forward guidance, “without a change in sequencing”, that is net asset purchases will be phased out, while re-investment of redemption continues and rates won’t rise until well after the end of net asset purchases, which currently are set to continue until September at a reduced pace of EUR 30 bln. The stress remains on “gradual change” in guidance, which confirms that the hawks pushing for a quick commitment to an end date for net asset purchases as growth strengthen remain in the minority, but after bonds were supported through the morning, the comments triggered another sell off in Bunds and saw yields jumping higher in tandem with the EUR.
Meanwhile, in United States, U.S. initial jobless claims climbed 11k to 261k in the January 6 week following the 3k increase to 250k in the last week of December. That’s the highest since September 23. U.S. December PPI on the other hand slid 0.1% on both the headline and core, with the latter softer than expected. There were no revisions to November’s 0.4%, 0.3% respective gains.
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