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EUR/USD Moves Up Chaotically Lacking Definite Fundamental Factors

December 30, 2020 by

The euro has strengthened against the US dollar today, but the intraday market picture was utterly anarchic, spiking both up and down in a matter of minutes. The US macroeconomic indicators released today were rather mixed, causing disorder among foreign exchange traders.

Chicago PMI rose slightly in December — from 58.2 to 59.5. This was a positive surprise to USD bulls who had expected the index to go down to 56.6. (Event A on the chart.)

Pending home sales continued to decline in November, falling by 2.6%, while a positive growth by 0.1% had been forecast by market analysts. On the bright side, October’s change of -1.1% was revised to -0.9%. (Event B on the chart.)

Crude oil inventories fell by 6.1 million barrels during the week ending December 25, a lot more than the median forecast had suggested (a drop by 3.0 million barrels); the inventories went down by 0.6 million barrels a week earlier. Still, they remain well above the average level for this time of year. Total motor gasoline inventories fell by 1.2 million barrels and are now only slightly above the average value for this time of year. (Event C on the chart.)

Yesterday, a report on S&P/Case-Shiller home price index showed an increase of 7.9% in October (annual rate). This followed a move up by 6.6% a month earlier. A more modest rate of growth had been expected by analysts — 7.0%. (Not shown on the chart.)

EUR/USD as of 2020-12-30

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