US stocks rose yesterday ahead of key corporate earnings that will shed light on the performance of the private sector. Later today, companies like Johnson & Johnson, Verizon, NextEra, American Express, and General Electric will release their earnings. Other important firms that will release this week are Apple, Tesla, and Facebook. Last week, companies that published their earnings like Goldman Sachs and Morgan Stanley, beat the consensus estimates. Stocks were also mixed because of the uncertainties about Joe Biden’s stimulus proposals.
The British pound was little changed during the Asian session as traders waited for important earnings numbers that will come out in the morning session. In total analysts expect the numbers to show that the UK labour market continued to deteriorate in November and December. For example, they see the unemployment rate rising from 4.9% to 5.1% in November. Also, they expect the number of claimants to have risen sharply in December as the UK announced new lockdowns. Average earnings are expected to have risen as companies increased their employees pay because of the covid risks.
The US dollar index rose ahead of the first interest rate decision by the Federal Reserve that will start today. In it, members will deliberate on the state of the economy and the right response. In total, they expect the bank to leave its monetary policy tools like interest rates and quantitative easing unchanged tomorrow. Still, the language of the monetary statement will provide guidance on what to expect. Later today, the dollar will react to the new house price index and the Conference Board consumer confidence data.
The EUR/USD pair declined to an intraday low of 1.2115 during the American session. It then pared-back some of these losses and is now trading at 1.2142. On the four-hour chart, the price is slightly below the 25-day exponential moving average while the Relative Strength Index is at the neutral level of 48. Also, the price seems to have formed a small double-top pattern at 1.2187. Therefore, the price will likely continue falling as bears target important support at 1.2100.
The USD/JPY pair declined slightly today after the Bank of Japan released its minutes of last week’s meeting. It dropped to 103.7 from yesterday’s high of 103.95. On the four-hour chart, the pair is forming a bullish flag pattern that tends to break-out higher in most cases. It is also at the same level as the 25-day EMA while the Relative Strength Index is at the neutral level of 50. Therefore, in the near term, the pair will likely remain in the current range and then break out.
The GBP/USD is trading at 1.3666, which is in the same range as yesterday. The price is also below the year-to-date high of 1.3750. On the four-hour chart, the price is at the same level as the 25-day EMA and is slightly above the lower ascending line. It is also between the ascending channel. Therefore, for today, the pair will likely remain in the current range. In case of better employment data, the pair will possibly retest 1.3715 because it will remove the incentive for negative rates in the UK.