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Negative data continues to dominate US economy

5 Dec 2019 11:30 AM

Negative data continues to dominate the US economy despite a series of rate cuts by the US Federal Reserve throughout 2019, the latest of which was released yesterday, which showed that service sector growth continued to slow in November, with the PMI slipping from 54.7 to 53.9 points. The ADP private sector added only 67 thousand jobs compared to the previous reading of 121 thousand.
The selling pressure continues to dominate the dollar index especially if tomorrow's US jobs data falls below market expectations and may return in the medium term to 96.90.
Despite improved service sector data in China, which helped to improve investor risk appetite and move away from safe havens, especially gold, as Trump's latest statements about the trade war, which includes approaching a trade agreement with China, but the dollar's decline limited the continued decline of gold to stabilize Near the resistance zone at $ 1480 an ounce, where purchasing power needs to stabilize the price above to support the continued rise towards $ 1495 an ounce.
The EURUSD is attempting to break above the resistance at 1.1090, which is still stuck below it, but a weaker US dollar could push the EUR up again and surpass those levels and reach 1.1170, especially as the pace of growth in the service sector in the euro zone and in Germany improves.
The Canadian dollar was the biggest beneficiary of the decline of its US counterpart, especially with the positive tone of the Bank of Canada at its meeting yesterday evening. The bank kept the interest rate unchanged at 1.75% as expected, and the bank stressed that the economy has improved significantly and that the current situation does not require further stimulus measures, especially with the growth of investments at a strong pace. Indeed, the bank added that fears of a recession in the global economy have declined strongly, which will undoubtedly support the growth of the export sector in the coming period. The Canadian dollar reached 1.3180 levels.
Oil prices rose strongly on the back of a decline in US oil inventories at a strong pace of 4.9 million barrels last week against expectations of a decline of 1.6 million barrels. In addition to anticipation of the OPEC meeting today and the state of optimism accompanying the meeting the possibility of members agree to increase the pace of production cuts. However, we should take into account the stability of oil at the resistance level of $ 58.62 a barrel and a rebound from those levels will make us likely to return again to $ 56.60 a barrel.
As for the major stock indices, the German DAX rallied strongly to test the resistance at 13172 as a rebound from those levels could push it back to 12900. The Dow may continue to rise to 27860 before resuming its bearish trend again.
Apple shares started to decline by the end of yesterday's session to make it likely to continue falling to $ 256 levels, as well as Netflix shares may return to test 296.30 levels and the rising trend line before rising to 316.60. Turning to today, our positive outlook remains based on Starbucks stocks as the price returns to test the neckline of the inverted head and shoulders pattern.