Technical Analytics Report

Daily Analysis Report 10 Jan '2022



During the Asian session, the European currency displayed a modest decline versus the US dollar, reversing a substantial surge last Friday, when investors were actively buying the single currency on the release of encouraging macroeconomic numbers from Europe. In December, the euro area’s Consumer Price Index increased by 5% after climbing by 4.9 percent the month before. Analysts predicted that the dynamics would slow to 4.7 percent. At the same time, the Core Consumer Price Index maintained the same trend at 2.6 percent, which was somewhat better than market expectations of a 2.5 percent deceleration. After expanding by 1.7 percent the month before, retail sales increased by 7.8% in November, setting a new high. According to market predictions, the indicator was expected to grow by 5.6 percent. As a result of the release of the contentious data on the US labor market for December, the US dollar has been under pressure. Nonfarm Payrolls, in particular, were only 199K in December 2021, down from 249K in November. Forecasts projected a 400K increase.




During the morning session, the British pound is trading near zero against the US dollar, stabilizing around 1.3580 and local highs from November 9. The pound managed to show a reasonably confident gain at the close of the previous trading week. The market’s reaction to the release of not the most substantial macroeconomic numbers from the United States. The lackluster growth in nonfarm payrolls in December, disappointed investors. At the level of 400K, fundamental dynamics turned out to be twice as awful as market expectations, while the report’s other metrics turned out to be very optimistic. After falling to 4.2 percent in November, the unemployment rate fell to 3.9 percent in December. Statistics from the United Kingdom did not help to clarify the market position. The Markit Construction PMI decreased from 55.5 to 54.3 points in December, which was somewhat better than market expectations of a drop to 54 points. Halifax House Prices stayed constant at 1.1 percent in December, despite investor expectations to drop to 0.7 percent.




During the Asian session, the New Zealand dollar fell slightly versus the US dollar, correcting following Friday’s gains that ended a two-day “bearish” rally. Following a drop in the middle of last week, the New Zealand dollar has reverted to its December 21 lows. The development of the downtrends was aided by statements from the US Federal Reserve officials, who hinted at an impending tightening of monetary policy in the country despite continued inflation and labor market stabilization. As a result, investors’ enthusiasm was tempered by Friday’s report on the US labor market for December 2021. Nonfarm payrolls increased by only 199K in December, falling short of estimates of 400K and the previous value of 249K. Because the macroeconomic calendar is largely empty today, trading activity is low. Investors expect the situation with the US Federal Reserve’s chances for tightening monetary policy to be clarified. However, such information will not be available until Tuesday, when Chairman Jerome Powell delivers a speech to the US Congress.




In Asian trading, the US dollar advances somewhat versus the Japanese yen, testing 115.80 for a breakout. The instrument is recovering from its local laws, updated at the end of the previous trading week due to the formation of “bearish” attitudes. At the same time, the pair is still hovering at all-time highs. The dollar’s position rose further last week after the release of the “hawkish” minutes of the US Federal Reserve meeting, which hinted at the possibility of the American regulator tightening monetary policy more quickly shortly. The US Federal Reserve, in particular, may agree to end its quantitative easing (QE) program sooner than expected, causing a shift in the start of the rate-hiking cycle. Japan’s statistics, revealed last Friday, left a lot to be desired. After declining by 0.6 percent in October, household spending decreased by 1.3 percent in November. Positive dynamics were projected to materialize at 1.6 percent, according to analysts. At the same time, the Tokyo Consumer Price Index rose from 0.5 percent to 0.8 percent in December.




Gold prices are slightly lower at the start of the new week, settling at about 1800.00. The minutes of the US Federal Reserve meeting published last week put downward pressure on the instrument’s price, indicating the American regulator’s “hawkish” stance on monetary policy tightening. The Federal Reserve of the United States has noted rising consumer inflation rates and a tight labor market. At the same time, Friday’s report on the US labor market indicated that nonfarm payrolls grew slowly. In December, only 199K jobs were created despite investor expectations of 400K.