US CPI rates are due out today

The US CPI rates are due to be released today and are expected by market analysts to come in lower than the prior month, which could weaken the greenback.The UK’s employment data came in better than expected, with the unemployment rate coming at 4.2%, in addition to the Average hourly earnings rate which came in at 7.9% compared to the expected rate of 7.4%. However, the three-month employment change figure, came in lower than expected -207k, which could cast some doubt on the resilience of the UK’s labour market. On a monetary level, BoE’s Mann yesterday, during her speech indicated that she believes that inflationary pressures will remain for a prolonged period of time and as such could support the pound, as market anticipations of a potential future rate hike, may rise. Over in the commodities markets, we note that the EIA productivity report showed that oil productivity has increased despite the reduction in oil rigs. In addition, OPEC’s monthly report stated that the forecast for China remains unchanged and that oil market fundamentals remain strong, despite the “overblown negative sentiment in the market regarding China’s oil demand”, which may support oil prices.

EUR/USD appears to be moving in a sideways fashion, after failing to break below the 1.0665 (S1) support level and is now currently aiming for the 1.0745 (R1) resistance level. We maintain a neutral outlook for the pair and supporting our case is the RSI Indicator below our 4-hour chart which currently, registers a figure near 50, implying a neutral market sentiment, in addition to the narrowing of the Bollinger Bands which implies low market volatility. For our neutral outlook to continue, we would like to see the pair failing to break above the 1.0745 (R1) resistance level and remaining confined between the 1.0665 (S1) support and 1.0745 (R1) resistance levels. For a bullish outlook, we would like to see a clear break above the 1.0745 (R1) resistance level, with the next possible target for the bulls being the 1.0835 (R2) resistance ceiling. Lastly, for a bearish outlook, we would like to see a clear break below the 1.0665 (S1) support level, with the next possible target for the bears being the 1.0570 (S2) support base.

WTICash appears to be moving in an upward fashion, having broken above resistance now turned support at the 77.25 (S1) support line. We maintain a bullish outlook for the commodity and supporting our case is the RSI indicator below our 4-hour chart, which currently registers a figure near 60, implying a relatively bullish market sentiment, in addition to the upwards-moving trendline which was incepted on the 8 of November. For our bullish outlook to continue, we would like to see a break above the 80.70 (R1) resistance level, with the next possible target for the bulls being the 85.40 (R2) resistance ceiling. On the other hand, for a neutral outlook, we would like to see the commodity remaining confined between the 77.25 S1) and 80.70 (R1) support and resistance levels respectively. Lastly, for a bearish outlook, we would like to see a clear break below the 77.25 (S1) support level, with the next possible target for the bears being the 73.95 (S2) support base.

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Today in the European session, we note the release of UK’s employment data for September, Sweden’s October CPI rates, Eurozone’s revised GDP rates for Q3 and Germany’s ZEW economic sentiment and current conditions for November and note that ECB’s chief economist Lane and BoE’s MPC member Dhingra are scheduled to speak. In the American session, we highlight the release of the US CPI rates for October and note that BoE chief economist Pill, Fed Vice Chair Barr, Cleveland Fed President Mester and Chicago Fed President Goolsbee are scheduled to speak. Later on, we note the release of the US API weekly crude oil inventories figure. During tomorrow’s Asian session, we note the release of Japan’s revised GDP rate for Q3 and China’s urban investment, industrial output and retail sales for October.