09.01.2014 - ECB meeting will be in the spotlight today

Major European stock indexes have not changed much over the yesterday’s trading session. On the one hand little support for markets was provided by macro data, but on the other hand – traders were not in a hurry to gain new positions before the ECB meeting. Retail sales growth in the euro area in November appeared to be the strongest in 12 years. At the same time, the unemployment rate remained unchanged at a high level of 12.1%. The total number of unemployed in the euro area is 19.2 million people. Percentage of unemployed people younger than 25 years remained at 24.2%. Factory orders were released better than the forecast of 1.2% and increased by 2.1%. Germany’s trade surplus has risen in November to 17.8 billion euro, compared with the previous rate of 16.7 billion.

The central news of the day was the data on the U.S. labor market. Private sector added 238 thousand jobs in December, while growth was expected only by 199 thousand According to the minutes of the previous meeting of the U.S. Federal Reserve, the majority of members of the Federal Open Market Committee supported the tapering of quantitative easing program, but some members, nevertheless, opposed this step, explaining their decision by low inflation in the country.

On this background the euro dropped against the U.S. dollar and reached the level of 1.3550. Growth is limited by the resistance at 1.3660. In case of further decrease, the price can reach 1.3530. Further progress will depend on the ECB decision on interest rate (12:45 GMT) and the statements of the head of ECB Mario Draghi at his press conference (13:30 GMT). We do not expect the revision of rate, but Mr. Draghi can explain how the ECB intends to stimulate the economy in 2014.

Money Monitoring

The main news in the UK yesterday was the publication of the house price index, which fell sharply in December, recording the first decline in 2013. As a result, the prices slipped by 0,6% in December, but increased by 1.9% in the 4-th quarter. Stable growth of the economy and the reduction of unemployment give grounds to call the pound one of the strongest currencies. We expect the growth of the pair to continue inside the rising channel. The lower boundary of the channel will serve as the support line. Growth will be constrained by the level of local maximum – 1.66. Today, in the center of attention will be the statement of the Bank of England. The volume of program of assets purchases and interest rate decision will be announced at 12:00 GMT.

USD/JPY is still trading inside the rising channel. Now the price is consolidating above the strong level 104.60. The closest target in case of further growth will be the level of the previous local maximum 105.40. We maintain a long-term positive outlook for the pair.

AUD/USD broke through the support at 0.89 on the strengthening of the U.S. dollar. The target for the subsequent movement will be the level of 0.8840. Price may consolidate for a while near 0.8870. Growth is limited by the resistance at 0.89. We maintain a long-term negative outlook for the Australian dollar.

Despite the fact that crude oil inventories during the last week declined by 2.7 million barrels, the price of Light Sweet crude oil has fallen sharply. The reason for a collapse in prices was the increase in gasoline inventories by 6.2 million barrels and distillates by 5.8 million barrels. The closest target in case of further reduction will be the level of 92.00 dollars per barrel, after reaching which we can see a correction. Growth is limited by the level of 93.60.

The price of gold failed to break through the support level of 1220 and is now traded within the corridor 1220-1242 dollars per troy ounce. Low demand for physical gold and high yields in risky assets continues to put pressure on the quotations of gold.

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