Investors remained active buyers of the U.S. dollar last week, which has risen to its highest level since December.
U.S. economic data was mixed. The labour market posted 49 thousand new jobs and the unemployment rate fell to 6.3%. The ISM manufacturing and service PMI indices were 58.7 and 58.7 points respectively, suggesting strong growth and positive expectations among business participants. The number of new jobless claims fell slightly from 0.85 to 0.78 million a week.
Virus data hinted at a further slowdown in the spread. The weekly average number of new cases in the U.S. has dropped from 160 to 119 thousand a day. The number of people vaccinated in the country rose from 28.9 to 40.5 million and the change was 11.6 million. In the United States, around 12.3% of the population has already been vaccinated. Around 128 million doses of the vaccine have been injected worldwide, a level that has risen from 91 million last week. The largest share of the population is vaccinated by Israel, around 60%, and the United Arab Emirates, where the rate is 39%.
The major currency pair EUR/USD depreciated to 1,195-points on Thursday, but offset some of the losses on Friday and rose to 1,205 points. Among the economic data in Europe were the results of the industrial and service sector managers' indices, which reached 54.8 and 45.4 points, respectively. Europe's preliminary fourth-quarter economic change was -5.1% year-on-year. Preliminary annual European inflation stood at 0.9% in January. In December, German retail sales were 1.5% higher than a year ago, but the drop compared to October was as high as -9.6%, mainly due to strict quarantine measures to prevent the spread of new virus mutations. Also, the number of orders from the largest industrial economy in Europe was 6.4% higher in December than a year ago, which suggests that global demand for goods is recovering moderately and international trade is recording a further positive trend. The EUR/USD pair closed the week with a fall of -0.7%.
The main Asian pair, USD/JPY, continued to rise, reaching 105.6 points. Among the economic data were the manufacturing and services PMI indices, which amounted to 49.8 and 46.1 points, respectively. Household expenditure fell by -0.6% year on year. USD/JPY ended the week with a rise of 0.7%.
The British pound consolidated against the U.S. dollar and the pair remained below the level of 1,375 points. Among the economic data were the manufacturing and service sectors PMI indices, which reached 54.1 and 39.5 points. The country's central bank did not change interest rates and monetary policy. GBP/USD ended the week up 0.4%.
This week will start with German industrial production data. Germany's international trade figures will be monitored on Tuesday. Investors will expect actual inflation data from Germany and the U.S. on Wednesday. No major news is scheduled on Thursday, and on Friday, Britain’s fourth-quarter economic change and December industrial production data will be watched.
According to Admiral Markets market sentiment data, 31% of investors have long positions in the EUR/USD pair (up 4 percentage points from last week’s data). In the main Asian pair USD/JPY, 18% of investors have long positions (up 3 percentage points). In the GBP/USD pair, 17% of participants expect a rise (down 30 percentage points). Such market data is interpreted as contraindicative, so a rise in EUR/USD, GBP/USD and USD/JPY is likely. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.
Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com
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