By Market Crowd Hunter EA
- Important economic data
- The goals – unemployment of 4.7%
- Expect US inflation data
- EURUSD – probability of continued growth.
Well, the new year has begun. Let’s look at what is happening in the markets now.
At the beginning of the year, the Nasdaq index dropped to the support level around 10700 – 10600.
But on January 6, the market rose sharply by more than 2%. This happened at the release of data on the labor market in the United States.
At the same time, the data were quite contradictory, from my point of view:
The unemployment rate returned to 3.5% – a historical minimum.
Change in the number of people employed outside the agricultural sector +223,000 – yes, the indicator is lower than the previous one, but higher than the forecast.
The average hourly wage increased by 0.3% mom and 4.6% YoY, which is worse than forecast, but the growth is still higher than the rate before the pandemic (until March 2020, the average growth YoY was 3%).
The total number of the labor force reached 159.2 million people altogether – a new record.
The goals – unemployment of 4.7%
Probably, the market rejoiced at the absence of signs of recession.
At the last meeting last year, Powell outlined a commitment to fighting inflation and one of the main points that cause concern is the overheating of the labor market. At the same time, the goals were announced – unemployment of 4.7%. Thus, the released data may push the Fed to continue a tougher PREP and move away from softening rhetoric, which we could observe in December 2022.
A little unexpected data came from Europe, where inflation fell by 0.3% in the dynamics of m/m. But at the same time, core inflation continues to grow in Europe (+0.6% mom).
Expect US inflation data
On Thursday, 12.01, data on inflation in the United States will be published. It is expected to decrease to 6.5% YoY and increase by 0.1% mom. If the data comes out within or better than the forecast, the growth may still continue. If inflation is higher than forecast, then we will expect a decline in the markets and a rise in the dollar.
From a technical point of view, a divergence has formed on the RSI indicator, so the current growth may just be a working out of this signal.
It is difficult to make forecasts now. If the Fed manages to beat inflation and at the same time preserve the labor market, then the stock and crypto markets will take off. But so far it is hard to believe, so we will wait for the data release on Thursday.
EURUSD – probability of continued growth
EURUSD has grown over the past 2 days by 2.5% (260 points) on inflation data in the Eurozone and general market optimism after data on the labor market in the United States.
Inflation in the Eurozone has declined more than expected. The main contribution to this decline was made by energy prices. For example, gas prices have returned to the levels of the beginning of 2022. But at the same time, there is a further increase in core inflation – cleared of food and energy prices.
At the same time, production inflation (PPI) also continued to decline (-0.9% mom), but still remains at the level of 27.5% YoY.
This is an important signal for the ECB that they are on the right track – but not enough has been done yet. Therefore, we should expect further attempts from the ECB to tighten monetary policy in 2023.
At the moment, the number of buyers is 34.5% against 65.5% of sellers.
Technically, the price has approached the important resistance of 1.0750 – 1.0770. But at the moment, a divergence has formed on the RSI indicator.
It is worth looking for an entry to buy when the level of 1.0750 – 1.0770 breaks or in the case of a correction to the levels near 1.0580. The target may be the upper limit of the 2nd child ascending channel in the area of 1.0950.
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