Dollar edged lower on broad based rally in global stocks and commodities earlier today but recovers in early US session after better than expected job market data. The ADP employment report showed -22k contraction in the private job sector of US, versus expectation of -40k and prior month's upwardly revised -61k. Challenger report showed planned layoff in January rose 59% from December, hitting a five month high. Nevertheless, as Challenger CE said, The increase in January is not necessarily a sign of a recession relapse. It is not uncommon to see a surge in job-cut announcements to begin the year. Year over year, planned layoffs dropped -70.4%.
Euro was lifted by news that Greece deficit plan got EU backing after the governerment announced more measures to cut the deficit, including a freeze on public sector wages. EU Economic and Monetary Affairs Commissioner Joaquin government said that the EU is endorsing the Greek program even though implementation is not easy. Euro is additionally supported by upward revision of January PMI services from 52.3 to 52.5. Though, retail sales disappointed by being flat mom in December.
Sterling lost momentum and pares earlier gains after disappointment from Services PMI which unexpectedly dropped to 54.5 in January. Earlier today, Sterling climbed on stronger than expected consumer confidence data. Nationwide consumer confidence jumped more than expected from 70 to 73 in January, helped by positive signs from manufacturing sector and labor market. Nevertheless, Nationwide chief economist Gahbauer said confidence is likely to remain fragile for some months. BRC shop price index rose more 2.3% in January.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3908; (P) 1.3941; (R1) 1.3996; More.
EUR/USD's break of 1.3989 minor resistance indicates that a short term bottom is already formed at 1.3852 on bullish convergence condition in 4 hours MACD. Stronger rebound could now be seen towards 1.4193 resistance But after all, we'd expect upside to be limited by 1.4217/4578 resistance zone and bring resumption of the whole fall from 1.5143. Below 1.3852 should target key cluster support at 1.3737 next.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, however, break of 1.4578 resistance will leave the fall from 1.5143 in three wave corrective structure and mixes up the outlook.