US Inflation And Jobless Claims To Affect The US Dollar And Stocks

Wednesday saw no surprises within the financial trading markets. Trends have continued in the same direction with clear impulse waves as they had on Monday and Tuesday. Global equities continued to decline, and the price of crude oil formed another bearish daily candlestick. Markets have been quiet in terms of “news” over the past 48 hours, but this will change from today onwards.

The US Dollar and stocks will be affected by this afternoon’s Weekly unemployment Claims which are expected to remain unchanged. In addition to this, European-based investors will be fixed on the scheduled speech for the European Central Banks president. Though it should be noted that investors are specifically eager to see the reading for tomorrow’s Producer Price Index and Tuesday’s Consumer Price Index. The two inflation-based indexes are likely to have a stronger effect on the price of the US Dollar and stocks.

Furthermore, the price of Cryptocurrencies also came under pressure and formed a slightly lower price range than the previous week. The price declined back to $16,623 but has formed a price range between $16,704 and $16,837. Crypto exchanges continue to try to regain the confidence of investors through the “proof-of-reserves” report. The price has improved over the past 2-weeks, but the sector remains under pressure.

Crude Oil prices have continued to decline again to a new price low and are now almost at a 12-month low. The price has been affected by a decline in demand, but most economists have advised that the price is still under threat of another bullish rally.

Firstly, the discounted value of the US Dollar can support prices, but more importantly, Russia has released 3 potential scenarios in response to the latest price caps. It is no surprise that none of the 3 are positive for supply. Nonetheless, it is important that traders continue to monitor the price movement. 

Crude Oil 1-Hour Chart on December 8th

EUR/USD

The EUR/USD has formed a “Head and Shoulders” price pattern which is known as a bearish signal, in other words, in favor of the US Dollar. The price of the instrument had increased in value yesterday but this morning is showing mixed volatility. The latest price movement since the opening of the European Session is in favor of the US Dollar.

In terms of technical analysis, the indicators of most timeframes are providing signals of further bullish price movement. Moving averages are still crossed over upwards and oscillators remain above 50.0. However, the price movement is most likely going to be strongly influenced by tomorrow’s PPI announcement. Therefore it is important that traders keep into consideration that the movement and indications may change.

EUR/USD 4-Hour Chart on December 8th

The US Dollar has not seen any major bullish price movements as the Federal Reserve is still expected to hike 50 basis points and not 75. Many analysts have advised the price is appropriately priced based on a 50-basis point hike. The US Dollar Index is now priced at 105.20 and has increased by 0.11% so far today.

In the absence of major economic releases for the US, investors have also focused on comments made by CEO of large companies including Goldman Sachs, JP Morgan, United Airlines and Walmart. The CEOs more or less gave a similar opinion on the economic outlook for 2023.

All heads have stated that the economy is likely to see a downturn and that this is required in order to bring down inflation. However, the banking sector advised if geopolitical tensions continue to rise it will bring the global economy crashing. This can also affect other safe haven assets such as Gold.

The Euro on the other hand has been supported by better-than-expected economic data. For example, the gross domestic product for the third quarter came in slightly higher than that expected. However, most economists remain bearish on the price of the Euro. Experts have advised an escalation in tension with Russia will hurt Europe a lot more than the US.

Summary:

• No major news has been released over the past 48 hours but trends continue from Monday. 
• Investors will be concentrating on the Unemployment Claims and ECB Speech this afternoon.
• The Euro is supported by the region's Gross Domestic Product but analysts still remain bearish on the currency.
• The US Dollar is appropriately priced based on a 50-basis point hike.