EUR/USD : Inflation, normalisation, restriction…

(News Bulletin 247) – If the underlying bias remained bearish on the Euro / Dollar currency pair, the week will have rhyme with the listing of a string of dojis centered around $ 1.13. The feeling of perplexity will have been nourished by the appearance of a new variant of the coronavirus. Phenomenon with still unclear consequences, which adds a new peak to the triangle inflation – monetary normalization – Covid …

“The resumption of the pandemic is less worrying than a continuation of inflation” for Emmanuel Auboyneau, Managing Partner of AMPLEGEST, for whom “global growth is today solid, driven by strong consumption, by the reinvestment of companies and by an improvement in international trade.On the other hand, the supply crisis, linked to dysfunctions in the production chain and tensions in the labor market […] raise fears of more lasting inflation than expected, particularly in the United States.

Inflation, a term from which the adjective “transitory” is gradually withdrawn. Federal Reserve boss Jerome Powell again cast a chill by acknowledging, in response to a question about the appropriateness of retaining the term “transient” to qualify the current spike in inflation, that the time has come to withdraw that word. … For the president of the Fed, recently chosen for a second term, if the price increases are broadly linked to supply problems, these increases have spread more globally and the risk of durably higher inflation s ‘is increased. In other words, it is a bit of the whole scenario put forward in recent months that has been demolished, and the banker recognizes that we will have to discuss a more rapid withdrawal of unconventional support measures, without even talking about a rate tightening.

A scenario of two federal rate hikes instead of three in 2022 now has the advantage. Basically, the appearance of this new variant would ultimately not grant the most precious good to J. Powell: time? This is the thesis defended by Jean-Jacques Friedman – Investment Director of VEGA Investment Managers, a subsidiary of Natixis Wealth Management. “If caution is in order in the short term, Omicron is giving back time by allowing J. Powell not to bow to the pressure of recent statistics and to settle for more aggressive monetary tightening. In fact, investors are forecasting now two key rate hikes by the Fed in 2022, compared to three previously. “

In terms of statistics, the two main landmarks of the morning were on the one hand the confirmation of an unemployment rate of 7.3% of the active population in the Euro Zone, but above all a surprise increase of 5.4% in “producer” prices in monthly rate in the Euro Zone, that is to say in comparison with the month of October over the month of September. If we compare to October 2020, the outbreak is … 21.9%. Across the Atlantic, the Department of Labor has published encouraging statistics on employment with new registrations for unemployment benefits in the order of 220,000 for the past week? Target beaten, therefore, before the publication of the federal NFP report today.

The latter is the big “macro” meeting of the day. The market expects 553,000 job creations in the private sector (excluding agriculture) and a drop in the unemployment rate, to 4.5% of the working population. Verdict at 2:30 p.m. (Paris time). Also to be followed by ISM services at 4:00 p.m.

In the immediate future, traders have just learned of the final data from the PMI Services activity indicators. For the Eurozone as a whole, the index stands at 55.9, slightly below expectations. Composite data (with industry included) is therefore available. Chris Williamson, chief economist at the institute, warns: “An improvement in the economic growth rate reported by the euro area PMI is likely to be shortlived. Not only has demand growth weakened, but demand growth has weakened. Business expectations for future growth also declined as concerns about the pandemic escalated again. With the data collected before the Omicron variant was announced, sentiment about the near-term outlook will inevitably have been even higher. more shaken, for both industry and services. More resilient expansions are being recorded in Spain and Italy, although even here recent gains are at risk if social distancing restrictions are to be tightened. “

At midday on the forex market, the Euro was trading against around $ 1.1315.

KEY GRAPHIC ELEMENTS

The seller’s current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu November 10. This is a major fact, which resulted in a massive release of selling energy. The short term is aligned with the medium term, bearish, on the Euro / Dollar currency pair, but the entry point is no longer optimal, as the probabilities of the formation of a protest rebound increase at this stage. Traders will temporarily prefer to stay out of the spot while waiting for a suitable entry point.

MEDIUM-TERM FORECAST

In view of the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the pair Euro Dollar (EURUSD).

We will keep this neutral opinion as long as the price of the pair Euro Dollar (EURUSD) is positioned between the support at 1.1150 USD and the resistance at 1.1360 USD.

DAILY DATA CHART

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