The US dollar is the story for the first trading day of 2018 with as EURUSD trades towards the key 1.2090-1.2100 levels. Across the major currencies, the dollar is down against all of them, with Nok, Won and Sing dollar the best performers. The Euro and Pound are up 0.45% and 0.35% respectively. However, the move on EURUSD was initially a Euro story after mixed manufacturing data led to optimism in the area. The overall EZ reading came in in line with expectations at 60.6 with a number of periphery figures dropping below expectations.
EURUSD looked set to test the highs at 1.2090 and 1.2100 before stalling at the all-important resistance level. Highs so far have been 10 pips off the 1.2090 level, but with weakness in the greenback, we could well see a further test this afternoon when the PMI’s are released from the US.
Along with the move in the Euro, the dollar weakness has seen Gold prices also test key upside levels. Looking at gold on a daily chart shows that we are seeing a test of a key 61.8% fib retracement level, a level that has been in place since September. Measuring from the highs from the end of August to the lows in early December we can see the 61.8% fib retracement comes in at the 1311.35 level. However, there is a further level at previous highs that we should look out for, at 1316.50, any break of the fib level could leave strong bulls a little cautious of the market stalling at the higher point.
Equity markets looked set to move strongly to the upside this morning, however, equity markets across Europe have slumped as the session has moved, but are now trading off the lows of the session. As we move into 2018 there is still a global obsession with the relentless march higher of US equity markets, however, for at least today it seems that Europe has shaken off its reliance on US markets. Europe is down across the board while US futures are pointing to a mildly stronger open.
For the US open the Dow is expected to open higher by 25 points with the S&P up 4.
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Equities hit with the inflation stick; Saudi assurance provides oil with shelter from the storm; USDJPY hedge plays building; Gold appears prone