The US dollar continues higher after being backed by positive numbers, amid weaker oil prices.
This most recent surge sends EUR/USD to touch the round level of 1.18, GBP/USD loses 1.51 and getting closer to the very round 1.50 number and AUD/USD is inching ever closer to the very round 0.80.
The ISM and Markit PMIs came short of expectations: they showed slower growth in both sectors in December after seeing stronger growth in November. Also recent housing numbers haven’t been convincing.
Yet as we near the Non-Farm Payrolls publication on Friday, we had a positive hint: ADP NFP showed a gain of 241K jobs, better than expected and accompanied by an upwards revision.
Also the trade balance number, which is not that important on its own, came out with a deficit of under $40. This means that Q4 growth will probably not be too low.
For the euro, we had an official read of deflation in the euro-zone. Together with the terrorist attack in Paris, EUR/USD fell lower, under 1.1830. As the baton moved to the US, the pressure continues and the pair reached 1.1801.
QE is partially priced into the price of the euro, with some already interested in the size of the program: €500 billion could be key.
For the pound, we had a streak of disappointing PMIs in the UK. The drop below 1.55 seen earlier accelerated and the recent US data sends it under 1.51. The very round 1.50 level is probably guarded very closely. A breach could trigger either a big bounce or a cascading fall together with stops.
For the Aussie, worries about China weigh, and the pair is already trading under the 2010 low of 0.8066. The next big level is very round: 0.80. Also here, we could see a lot of interest. See how to trade the Australian building approvals with AUD/USD.
Where will this dollar rally stop?
More: 2015 Preview for currencies & commodities: the Fed hike, EZ QE, slippery oil, UK politics, Big in Japan, AUD down under, Loonie blues and Gold – Market Movers #31
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