U.S. data yesterday showed housing starts at four-year high; it climbed 12.1% in December to a 954,000 annual rate against forecast for 890,000. The number of building permits climbed 0.3% in December to 903,000 annual rate, from a 900,000 in November. The stock markets responded with rise and Dow Jones Industrial Average added 0.63%. The euro rose 84 basis points, though the first reaction was decline. The pound dropped 14 basis points. On the whole the pond has been correlating with the U.S. stock exchange positively for 2 weeks. DJIA is rising, the pound is falling; the euro has been trading in range 1.3250 to 1.3400. We consider it is temporary and the euro will show indirect correlation with the stock market.
Today rather positive data on China’s economy was published. China’s Gross domestic product rose 7.9% in the fourth quarter. It compared with the 7.8% estimate. The data for the previous period was 7.4%. Retail sales rose 15.2% versus forecast for 14.9%. Industrial output rose in December 10.3% against forecast for 10.1%.
At 18:55 GMT+4 Michigan Sentiment index for January is published. Economists expect it to rise to 75 against 72.9 in December.
Thus, there are prerequisites for the stock markets to grow. There is a question whether the dollar rises today. The initial bearish reaction of the euro, the pound, and the Australian dollar to the news from China indicates this scenario.
The first bearish target is trendline on H4, 1.3334, the second is 1.3314, and then 1.3260. The growth is possible after the price consolidates above the trendline on H4, 1.3406, in this case the target is 1.3460.