Yesterday’s US Weekly Unemployment Claims came in at the lowest level since January 2007 bringing the 4-week moving average to levels not seen since the middle of 2007. This very good news failed to move the Dollar higher indicating the market’s general consensus that the Fed’s actions next week will only be a symbolic tapering gesture. In other words maybe only a $10 billion monthly reduction of their $85 billion total bond buying. Today’s price action will hinge on three economic reports the PPI, Retail Sales and the University of Michigan’s (U of M) Consumer Sentiment number. Retail Sales and the U of M numbers being the most likely to move markets. If Retail Sales were to come in just 0.1% or lower for both the full number and the Core rate, the Dollar would see some strong selling. If the U of M number comes in below 80.0 there would also be some good Dollar selling. The tone of the market is negative Dollar so any better than expected numbers would have to be substantially better to move the Dollar higher.
Technical Outlook
USD (SEP): Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside target is now at 81.14. The next area of resistance is around 81.70 and 81.91, while 1st support hits today at 81.32 and below there at 81.14.