The euro and the pound rose slightly against the US dollar after the release of fundamental statistics on the US economy, as well as after the statements made by the Fed representative, who believe that the central bank should not rush to increase the interest rate this year.
According to the US Department of Labor, the number of initial claims for unemployment benefits rose from 10,000 to 231,000 over the week from December 23 to December 29. Economists had expected that the number of unemployed people last week rose to 220,000.
Today, an important report on the number of people employed in the non-agricultural sector will be released, which may further weaken the position of the US dollar against a number of risky assets, in the case of weak labor market indicators. Economists expect job growth of 176,000 and unemployment at 3.6%.
As for the ADP report on the number of jobs in the US private sector, there was an increase.
According to Automatic Data Processing Inc. and Moody's Analytics, in December 2018, the number of jobs increased by 271,000. This was due to higher hiring of employees in a medium-sized company. In November, the number of jobs increased by 157,000, while previously, an increase of 178,000 was reported. Economists had expected an increase in jobs in the private sector by 178,000.
Weak performance indicators in the US manufacturing sector also put pressure on the US dollar in the afternoon. The slowdown occurred directly due to falling demand for US goods.
According to the Institute for Supply Management, the PMI Purchasing Managers Index for the manufacturing sector in December 2108 dropped to 54.1 points. Let me remind you that the index values above 50 indicate an increase in activity. Economists had expected the index to be 57.9 points in December.
As I noted above, the speech of the representative of the Federal Reserve Robert Kaplan was negatively perceived by the markets, as he was mainly against the rate hike this year.
As Kaplan stated, the Fed must be patient and take into account recent events, such as the slowdown of the global economy and the tightening of financial conditions in the markets. Kaplan also believes that the Fed should not exclude an adjustment to the process of reducing the balance, but so far there is no need to change the rate of reduction of the balance.
As for the technical picture of the EUR / USD pair, further growth will directly depend today on the data on inflation in the Eurozone, as well as on the report on the US labor market. The breakthrough of resistance of 1.1420 may lead to a larger uptrend, reaching the highs in the area of 1.1450 and 1.1490. In the case of a downward correction, a good level for euro purchases will be the area of 1.1345.
The material has been provided by InstaForex Company - www.instaforex.com