The United States macroeconomic calendar still has plenty of heavy-hitting data left that could impact market direction over the next few days. This week, specifically the ADP Employment Change report, has shown some major headwinds on the employment front, particularly as we see the private sector adding jobs. In December, the draft report showed private-sector employers created 41,000 jobs – 6,000 less than the 47,000 anticipated. This is a quite encouraging turnaround from last month’s 32,000-job loss.
The United States is about to see the arrival of a number of major economic indicators. That would be the October Factory Orders, the December ISM Services PMI and the November JOLTS Job Openings, in addition to the ADP report. All of these releases would help reinforce whatever newer market expectations and sentiments start to take root with respect to the trajectory of the U.S. economy.
Though signs of recovery persisted in job creation, the recent momentum in the labor market seems to have lost steam. The Momentum indicator has soured and is now deep under its neutral mark. The Relative Strength Index (RSI) is neutral at 44. That suggests to us a real absence of conviction or directional momentum in overall bullish or bearish sentiment in the market.
The EUR/USD pair is still bearish trading well below the 20-day SMA, currently standing at 1.1743. That’s a sign of a near-term bearish sentiment. Nonetheless, it defends a place above the 100-day SMA at 1.1667, which represents the immediate support floor. The 200-day SMA gives a solid bullish slope under the current trading price. As their renewed interest suggests, long-term bullish sentiment is far from dead.
The preliminary estimate of the December Harmonized Index of Consumer Prices (HICP) shows an annual increase of 2%, aligning with market expectations. Overall, this inflation data is set to increase pressure on the European Central Bank to take an increasingly hawkish stance on monetary policy in coming weeks.
The contradictory signals from U.S. and Eurozone economic data imply that market participants are still operating in an environment of uncertainty. Investors will be eagerly watching the next few reports. They’d like to see the health of their two economies and the strength of their two currencies.