EUR/USD wavers after strong Eurozone producer inflation data

US stocks rebounded as worries of the new variant of Covid-19 faded. Futures tied to the Dow Jones rose by more than 320 points while those tied to the S&P 500 and Nasdaq 100 index rose by more than 30 and 60 points, respectively. At the same time, the CBOE VIX index fell by more than 8%. This recovery comes a day after the Dow lost more than 500 points after the US confirmed its first Omicron patient. According to the Wall Street Journal, Joe Biden will toughen testing for foreign travellers and extend the mask mandate on public transport. People travelling to the US will need to be tested a day before departure. Therefore, stocks are rising as investors downplay the impact of the variant.

The euro was little changed today even after the strong Eurozone producer price index (PPI) data. According to Eurostat, the bloc’s factory-gate prices rose to a record high of 21.9% in October. This was a substantial increase from the previous 16.1%. It was also a better number than the median estimate of 19.0%. On a month-on-month basis, the PPI increased from 2.8% to 5.4%. The data came two days after the statistics agency published strong November consumer price index data. The numbers showed that the bloc’s CPI jumped to more than 6% in November. Still, some analysts believe that inflation is nearing its peak level.

The price of crude oil tilted higher as investors waited for the outcome of the OPEC+ meeting that ends today. Brent, the global benchmark, rose by more than 2% to $70.30 while the West Texas Intermediate (WTI) rose by more than 2% to $67. With the Omicron variant spreading, there is a likelihood that the cartel will decide to pause additional supply increases. This action will also be in reaction to the release of strategic petroleum reserves (SPR) by the American government. 

EUR/USD

The EURUSD pair was little changed after the latest EU PPI data. This is likely because investors are still waiting for the upcoming US jobs numbers scheduled for Friday. The pair is trading at 1.1335, which is a few points above the lowest level this week. On the four-hour chart, the pair is slightly below the 23.6% Fibonacci retracement level. It is also slightly above the middle line of the Bollinger Bands. Therefore, the pair will likely remain in this range during the American session.

XAU/USD

The XAUUSD pair tilted lower as the focus shifted to the upcoming US jobs data. It also declined after the relatively hawkish statement by the Fed chair. It is trading at 1,778, which is below this week’s high of more than 1,800. The pair has formed a bearish flag pattern on the four-hour chart. It has also moved below the 25-day and 50-day moving averages. It also moved below the 61.8% Fibonacci retracement level. Therefore, the pair will likely keep falling ahead of the NFP data.

USD/CAD

The USDCAD pair rose to a high of 1.2795. On the four-hour chart, the pair has formed an ascending channel. It is trading inside this channel and slightly above the 25-day and 50-day moving averages. The MACD is above the neutral level while the price is slightly below its year-to-date high. Therefore, the pair will likely keep rising ahead of the US and Canada jobs data.