EURUSD gyrates at monthly high ahead of EU/US PMI

Global markets are in Friday mood as momentum traders take a breather after a slew of economic releases and central bank announcements. The US Dollar, however, remains pressured at a 5.5-month low while tracing the downbeat Treasury bond yields, especially amid Fed rate cut talks.

European Central Bank (ECB) and the Bank of England (BoE) matched market forecasts of keeping the rates unchanged while the US Retail Sales and Jobless Claims flashed upbeat data but failed to trigger the US Dollar recovery.

It’s worth noting, however, that the EURUSD and GBPUSD remain sidelined whereas AUDUSD and USDCAD appear sluggish ahead of the key PMIs from Germany, the Eurozone, the UK and the US. Further, Gold fails to extend the latest run-up as China flashes mixed signals while US Dollar bears take a breather at a multi-month low. Even so, Crude Oil edges higher amid geopolitical concerns and hopes of witnessing more supply cuts from the OPEC+, as well as chatters about China's stimulus.

Elsewhere, Asia-Pacific shares stay firmer while tracing slightly upbeat Wall Street benchmarks and the US stock futures. That said, BTCUSD and ETHUSD retreat on the US SEC’s readiness to re-evaluate the spot ETF approvals.

Following are the latest moves of the key assets:

• Brent oil prints a three-day uptrend while positing mild gains around $77.00 by the press time.
• Gold price remains dicey around $2,038 at the latest, after refreshing the weekly high the previous day.
• USD Index licks its wounds at the lowest level in 4.5 months, indecisive near 102.00 as we write.
• Wall Street closed positive and so did the Asia-Pacific stocks while equities in the UK and Europe began the day with minor gains.
• BTCUSD and ETHUSD print mild losses to around $42, 700 and $2,270 at the latest.

US Dollar stays pressured…

US Dollar Index (DXY) failed to cheer upbeat US Retail Sales and Jobless Claims amid escalating calls for the Fed’s rate cuts in early 2024, licking its wounds at the lowest level since August. In doing so, the Greenback’s gauge versus the six major currencies, namely the DXY, failed to benefit from an absence of major change in the monetary policies of the European Central Bank (ECB) and the Bank of England (BoE).

Talking about the US data, Retail Sales for November marked a surprise growth of 0.3% MoM versus -0.1% expected and -0.2% prior. Further, the Retail Sales ex Autos, also known as the Core Retail Sales, also grew more than expected -0.1% and 0.0% previous readings to 0.2% for the said month. With this, the Retail Sales Control Group rose 0.4% from 0.0% marked in October. Also, Initial Jobless Claims dropped to 202K for the week ended on December 08, versus 220K expected and 221K prior, whereas Continuing Claims jumped to a multi-day high of 1.876M compared to the market forecasts of 1.887M and the previous readings of 1.856M.

China’s Industrial Production marked a stellar growth of 6.6% for November, versus 5.6% expected and 4.6% prior, but the Retail Sales grew 10.1% for the said month compared to the market anticipation of 12.5% and 7.6% previous readings. The housing market numbers, however, keep suggesting pain in the dragon nation’s real-estate sector.

On a different page, the ECB and the BoE both announced no change in respective benchmark rates the previous day. However, the ECB’s decision to reduce the Pandemic Emergency Purchase Programme (PEPP) by a monthly average of €7.5 billion joined President Christine Lagarde’s hawkish tone to defend the Euro and weigh on the US Dollar, especially when Fed Chair Jerome Powell teased rate cuts.

Elsewhere, Aussie PMIs improve but stay below the 50.0 level suggesting contractions in the activities while hawkish concerns about the Bank of Japan (BoJ) defend USDJPY sellers despite mixed prints of Japan PMI for December.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

PMIs in the spotlight…

The first readings of activity numbers for December will entertain the market players on Friday, after a busy week. Also important to watch will be the Empire State Manufacturing Index and the US Industrial Production details. It’s worth observing that the US PMIs and data might allow the Greenback to lick its wounds with the upbeat readings, which in turn can trigger the much-needed pullback in the EURUSD and Gold price. However, surprisingly downbeat figures won’t hesitate to keep the US Dollar bears on the throne during the final days of the year 2023.

Elsewhere, the economic concerns surrounding the Eurozone and the UK might challenge the Euro (EUR) and the British Pound (GBP) should the scheduled data disappoint optimists.

May the trading luck be with you!