DOW JONES RETREATS AHEAD OF US INFLATION DATA

The British pound is hovering near its lowest level in more than a year ahead of the latest UK GDP numbers that will come out at 9:00 GMT. The numbers are expected to show that the UK economy expanded by 22.2% in the third quarter. This will be a strong number and will be attributed to the country’s reopening. Other numbers that will come out today are the latest manufacturing and industrial production numbers. The Office of the National Statistics will also publish the latest trade and construction output data. Still, the key concern is that the UK government has announced new restrictions that could derail the recovery.

US equities were mixed on Thursday after the US published the latest initial jobless claims numbers. The data showed that the number of Americans filing for initial jobless claims declined to the lowest level in more than 50 years. This is another sign that the US economy is tightening and that the Federal Reserve will start tightening policies next week. Stocks wavered as investors waited for the upcoming US inflation data. The numbers, which will come at 15:30 GMT are expected to show that prices rose by more than 6.8% in November.

There will be some other additional numbers to watch today. Earlier on, the New Zealand statistics agency published strong electronic sales numbers. They provide further evidence that the country’s economy is doing relatively well. In Europe, the German statistics agency will release the latest inflation numbers. Based on the first estimate, the numbers are likely to show that inflation rose to more than 5% in November. Christine Lagarde will also talk and provide hints about the ECB’s monetary policy.

EURUSD

The EURUSD pair retreated after the strong initial jobless claims numbers. It declined to a low of 1.1290, which was lower than yesterday’s high of 1.1358. On the four-hour chart, the pair moved slightly below the middle line of the Bollinger Bands while the Relative Strength Index (RSI) has tilted lower. The same is true with the MACD. Therefore, while the path of least resistance is lower, the pair could also bounce back as investors buy the dips.

GBPUSD

The GBPUSD pair is hovering near the lowest point in more than a year. On the four-hour chart, the pair has moved below the 25-day moving average. It has also formed a descending channel that is shown in purple. The MACD and the Relative Strength Index (RSI) have also pointed lower. Therefore, the pair will likely keep dropping today because of the divergence between the Fed and the Bank of England.

USDCHF

The USDCHF rose to a high of 0.9255 after the Swiss government downgraded the economy’s recovery. On the four-hour chart, the pair is above the 25-day and 50-day moving averages. It has also moved above the 38.2% Fibonacci retracement level. The Relative Strength Index (RSI) is also pointing lower. Therefore, the pair will likely keep rising depending on the US inflation figure.