Euro little moved as data point to more weakness in the EU
The euro was little moved against the USD today even after some more negative data from the European Union. In Spain, the unemployment change rose by a higher number than trades were expecting. The reported number was 83.5K, which was higher than the consensus estimates of 60.3. In the region, the PPI for December rose by 3.0%, which was lower than the expected 3.2% and November’s 4.0%. On a MoM basis, the PPI declined by minus 0.8%, which was worse than the expected -0.7%. The only positive data came from Italy, which reported that the harmonized index of consumer prices rose by an annualized rate of 0.9%.
The sterling was little moved today after data from the UK showed that activity in the construction sector was slowing. The PMI number for January came at 50.6, which was lower than the expected 52.6. It was also lower than December’s PMI number of 52.8. The reason for this is that investors are being cautious due to ambiguity around Brexit. With the country facing uncertainty, investors are fearful in investing in real estate because the price could decline sharply in case of a no-deal Brexit. This comes as Theresa May prepares to travel to Brussels to hold talks with EU leaders.
The Australian dollar declined after a report by the government on the banking, insurance and pension sectors. The report called for a shakeup of the sector, which has been accused of ripping-off customers in the pursuit of profit and personal gain. The report had 76 recommendations such as extending the jurisdiction of the federal court to expedite criminal cases against misconduct. The report was even endorsed by the opposition leaders who vowed to go even further. The report took over 12 months to prepare and more than 10,000 complaints were heard.
The EUR/USD pair was little moved in today’s trading. It remained along Friday’s close of 1.1445. On the hourly chart, as a result of the consolidation, the three lines of the Bollinger Bands are close to the price. The Relative Strength Index (RSI) has been relatively neutral while the standard deviation has continued to decline further. At this point, the pair could continue to move lower although bias remains on the downside.
The price of crude oil rose in the Asian session but pared gains during the European session. As of writing, the price of Brent has declined by almost a percentage point. On the hourly chart below, the price has passed the 20-day EMA and is now along the 50-day EMA. The RSI has also declined sharply from a high of 70 to the current low of 43. The pair could continue declining and if it does, it will likely test the support of 54.
The GBP/USD pair was little moved and is currently trading at 1.3050, which is a few pips above the important support of 1.3040. This price is below the important 50 and 25-day EMA while the Awesome Oscillator remains in the negative territory. At this point, the pair could move in either direction but this will depend on the outcome of Theresa May’s meetings.