Equities Extend Gains as US CPIs Meet Forecasts

DOLLAR KEEPS SLIDING, RISKY ASSETS ADVANCE AS FED RATE OUTLOOK SEEN UNCHANGED

The US dollar continued trading lower against all the other major currencies on Wednesday and during the Asian session Thursday, losing the most ground versus CHF, AUD, and NZD.

DOW JONES — TECHNICAL OUTLOOK

The Dow Jones Industrial Average cash index traded higher yesterday, hit resistance at 36460, and then it pulled back. However, it remains above the upside support line drawn from the low of December 1st, and thus, we see decent chances for another round of buying soon.

EUR/USD — TECHNICAL OUTLOOK

EUR/USD traded sharply higher yesterday, breaking above the upper bound of the sideways range it had been trading within between November 26th and January 12th. Then, it overcame the medium-term downside resistance line drawn from the high of May 25th, and stopped near the 1.1465 zone, marked by the high of November 15th. With that in mind, we believe that the short-term picture may have turned to positive for now.

AS FOR THE REST OF TODAY’S EVENTS

The only releases worth mentioning are the US PPIs for December and the US initial jobless claims for last week. Usually, we monitor the PPIs as a gauge for the CPIs, as producer prices usually feed into consumer prices. However, bearing in mind that we already got the CPIs yesterday, we don’t expect the PPIs to prove a market mover. Just for the record, they are expected to accelerate further. Initial jobless claims are forecast to have declined slightly.

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