Eur/usd - page 194
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EUR/USD weekly outlook: December 1 - 5
The euro ended the day lower against the dollar on Friday after data showed that euro zone inflation slowed to five year low this month and tumbling oil prices fuelled concerns over the outlook for the global economic recovery.
EUR/USD dipped 0.11% to 1.2451 late Friday, closing in on Monday’s two year lows of 1.2359.
Eurostat reported that the annual rate of euro area inflation slowed to a five year low of 0.3% this month, down from 0.4% in October.
The report said that falling energy prices were the main factor pressuring inflation lower. Energy prices have fallen 2.5% on a year-over-year basis and look likely to continue to drop in the wake of Thursday’s decision by the Organization of the Petroleum Exporting Countries not to cut output quotas.
The move fuelled a broad based selloff in oil prices and added to fears over the impact of growing deflationary pressures on the global economic recovery.
The weak inflation data was seen as increasing the likelihood that the European Central Bank will implement quantitative easing measures in a bid to spur growth and stave off the threat of deflation.
A separate report showed that the rate of unemployment in the euro area was unchanged at 11.5% last month.
The US dollar index, which measures the greenback against a basket of six major currencies, was up 0.45% to 88.41 late Friday, not far from the four-year highs of 88.52 set on Monday.
Elsewhere, the euro gained ground against the yen and the pound, with EUR/JPY up 0.65% to 147.66 and EUR/GBP rising 0.46% to 0.7958 in late trade.
The yen has weakened broadly since the Bank of Japan unexpectedly expanded its stimulus program on October 31.
Japan’s Prime Minister Shinzo Abe dissolved parliament earlier this month, clearing the way for elections to be held on December 15 to seek a fresh mandate for his economic policies, which call for a weaker yen. The decision came after data showing that Japan’s economy unexpectedly fell into recession in the third quarter.
In the week ahead investors will be focusing on the outcome of a policy meeting of the ECB on Thursday, which is to be followed by the U.S. jobs report for November on Friday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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The ECB Could Decide On Quantitative Easing Soon
The ECB’s monthly rate meeting will focus minds this week on the debate over quantitative easing in the euro zone, as a series of data releases on both sides of the Atlantic sheds more light on European woes and U.S. strength.
Final purchasing manager indices for Europe and the United States, U.S. monthly jobs data and the European Central Bank’s updated forecasts will all provide clues to assessing the relative health of both regions.
The ECB staff inflation and growth estimates for the 18-nation single currency union are much awaited after data showed on Friday that inflation in the bloc was back to a five-year low, putting more pressure on the bank to take action.
Particular attention will be paid to internal debate within the ECB over quantitative easing and to ECB chief Mario Draghi’s comments on the data at his monthly news conference on Thursday, after his pledge to act to lift “excessively low” inflation.
The ECB is expected to leave key rates unchanged and wait for next year to decide whether to take the leap to government bond-buying.
A decision on QE may come as early as the first quarter, Vice President Vitor Constancio said last week. But arch-hawk German ECB policymaker Jens Weidmann responded that there were “legal limits” on printing money to buy government bonds.
“The ECB’s communication has not always been crystal clear this year, but overall it has moved steadily towards a more dovish stance despite internal tensions within the Governing Council,” French bank Credit Agricole wrote in a note.
“We expect no sovereign QE announcement at the December 4 meeting but a more formal, albeit conditional commitment to broader asset purchases.”
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Eurozone Nov. final PMI at 50.1 vs 50.4 flash figure
Eurozone Nov. final PMI at 50.1 vs 50.4 flash figure
EURUSD tried to rally during the session on Friday, but found resistance at the 1.25 handle, and then pullback to form a doji pattern. The pair is in sideways action waiting for a big move one way or another. A close today above the 10 day moving average could push the pair to the 50 day moving average at 1.2571 on the other hand a close below the 10 day moving average can throw the pair to Year low at 1.2357.
EUR / USD gave signs of consolidation on Friday.
From the daily chart, we see that the general trend for the EUR / USD remains downward, but given the positive divergence between daily oscillators and price action are some uncertainties surrounding short-term movements.
R3 - 1.25461
R2 - 1.25179
R1 - 1.24821
Daily Std. Pivot - 1.24539
S1 - 1.24181
S2 - 1.23899
S3 - 1.23541
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German Manufacturing Contracts As PMI Eases To 17-Month Low
Germany's manufacturing activity declined in November after production grew at the weakest pace in more than a year and new orders declined at the fastest pace in nearly two years, survey results from Markit Economics showed Monday.
The Markit/BME German Manufacturing Purchasing Managers' Index declined to a 17-month low of 49.5 from October's 51.4. The November PMI reading was earlier estimated at 50, which separates growth from decline.
Economists had expected the flash estimate to be confirmed in the final release. The PMI score was also below its long-run average of 51.9.
Production growth was the weakest since June 2013 in the face of sluggish demand from both domestic and foreign markets. The marginal growth largely mirrored a decline in output at consumer goods producers.
Economic uncertainties and weak export demand led to a third consecutive fall in new business. Export orders declined for the first time since July 2013, as demand from China, the U.S. and Europe weakened.
Consequently, manufacturers reduced their purchasing activity at the strongest pace in nearly one-and-a-half years. Stocks of purchases, backlogs and post-production inventories also declined.
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a very quite week start
lets see in which direction does the NFP report take the EURUSD.
Spanish jobless claims fall by 14,700 in November
The number of unemployed people in Spain fell for the first time in four months in November, easing concerns over the health of the euro zone’s fourth largest economy, official data showed on Tuesday.
In a report, Spain’s Employment Ministry said the number of unemployed people declined by a seasonally adjusted 14,700 last month, compared to expectations for an increase of 57,300.
The number of unemployed people rose by 79,200 in October.
EUR/USD was trading at 1.2456 from around 1.2454 ahead of the release of the data, while EUR/GBP was at 0.7925 from 0.7926 earlier.
Meanwhile, European stock markets were higher after the open. Spain’s IBEX 35 rose 0.15%, the DJ Euro Stoxx 50 advanced 0.3%, France’s CAC 40 picked up 0.4%, Germany’s DAX tacked on 0.2%, while London’s FTSE 100 edged 0.5% higher.