US equities rose on Monday as investors reflected on several catalysts. First, the market remained optimistic that big technology companies like AMD, Facebook, Amazon, and Alphabet will publish strong quarterly results this week. Other tech names that have already reported like Microsoft and IBM have published strong results. Second, there are signs the Omicron variant has peaked as the US continued to publish falling rate of hospitalizations. Third, stocks rose as investors predicted that the US economy will continue its recovery. Still, the pace of rate hikes by the Federal Reserve is a major source of concern to most investors.
The British pound rose after the latest report by Sue Gray. The government report criticized Boris Johnson for his failure of leadership by holding parties amid the Covid-19 lockdowns. She said that most of these events should not have happened. Still, there are signs that the report will not have a major impact on the UK economy. Later today, the sterling will react to the latest UK home price index by the Nationwide Society. It will also react to the final manufacturing PMI data by Markit. The biggest catalyst for the pair will be the latest interest rate decision by the Bank of England.
The economic calendar will have several key events today. Earlier, the New Zealand statistics agency published strong trade numbers for December. The numbers revealed that the country’s imports and exports did well in December as demand rose. In Germany, the country’s statistics agency will publish the latest employment numbers. Economists expect the data to show that the unemployment rate remained at 5.2%. In Canada, the statistics agency will publish the latest GDP numbers.
EURUSD
The EURUSD pair bounced back as investors focused on the strong Eurozone GDP data. The pair is trading at 1.1195, which is significantly higher than last week’s low of 1.1120. On the four-hour chart, the pair has managed to move slightly above the key resistance at 1.1183, which was the lowest level in November last year. Therefore, the pair will likely hold steady today even though a pullback cannot be ruled out.
GBPUSD
The GBPUSD pair tilted higher after the Sue Gray report as investors bought the news. It is trading at 3450, which is slightly higher than last month’s low of 1.3360. On the four-hour chart, the pair has moved slightly above the upper side of the bearish flag pattern. It has also declined slightly above the 25-day moving average while the MACD has formed a bullish crossover pattern. Therefore, the pair will likely break out lower because the bearish flag pattern is usually a bearish sign.
EURCAD
The EURCAD pair tilted higher ahead of the latest Canada GDP data. The pair rose to a high of 1.4274, which was the highest level since February 25th. On the four-hour chart, the pair has moved slightly above the 25-day and 50-day moving average and the 23.6% Fibonacci retracement level. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.4310.
