Eur/usd - page 322
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Yesterday the EURUSD pair fell on a wide range day and closed well in the red near the low of the day, shy above the 200 and 50-day moving averages. The currency fell after the ECB revised down the GDP and inflation forecasts for 2015-2017. Today we have the Nonfarm payrolls which are expected to rise to 220K in August from the 215K in July. A breakdown of the daily resistance 1.1097 would set ground for a further fall to daily support at 1.0900.
The single currency recorded a second consecutive loss against the dollar on Thursday. The pair broke the support at 1.1105 but finished above its levels. Short-term indicators remain in favor of the US currency, giving a request for continuation of the negative trend until the support at 1.1016. The session started at a price of 1.1223 as at the beginning the trend was neutral. Significant decrease was noted in the afternoon when currencies hit bottom for the day at 1.1087. The session ended with 35 pips up.
Not much of a movement on the EUR/USD because of the mixed data of positive unemployment rate and negative NFP
EUR/USD reached the support at 1.1090 and bounced off of it, but if it breaks below that level it might reach 1.1000, perhaps even 1.0950.
EUR/USD forecast for the week of September 7, 2015
The EUR/USD pair fell during the course of the week, testing the 1.11 handle. However, this is a market that still has plenty of support underneath it as well. Because of this, we have no real interest in selling this from a longer-term perspective. In the meantime, we feel that longer-term traders will simply have to sit on the sidelines and wait for more clarity. The shorter-term charts will probably be where most of the trades will be found, and this will keep us on the sidelines as far as long-term charts are concerned.
EU Preview: Waiting for Storm
Waiting for the storm - that's how market sentiment will likely look like in the coming week, as investors - facing a relatively empty macro calendar - will continue to digest European Central Bank (ECB) President Mario Draghi's recent comments about QE extension, while waiting for some crucial events in the following week.
The closely watched CPI print, which is scheduled for Wednesday, September 16 and is expected to reveal renewed deflationary pressures in August, is set to defy Mario Draghi's months-long efforts to keep inflation from spiraling down. That isn't likely encourage agood mood at the ECB's luxury Frankfurt headquarters.
Crucial events
The next day, the rate-setting conclave on the opposite shore of the Atlantic will decide on the question that has been plaguing the markets for months - to hike or not to hike the interest rates. In any case, the decision will shape global market sentiment for months to come, and may cause massive moves in FX markets, bonds, stocks and even commodities.
Finally, on September 20, Greece will vote in snap parliamentary elections and the outcome may potentially shake up European politics again, given the nation's (already!) third bailout package.
No top-tier macro
The coming week, however, will be occupied by waiting for these events, as the glimpse on the macro calendar reveals only some low-profile prints.
This includes July's industrial production data from Germany, which is expected to rebound to 0.9% growth month-on-month, up from the 1.4% dip seen previously, but slow down to a mere 0.1% uptick on an annual basis, down from the 0.6% growth in the prior month. The results will be published on Monday.
On the following day, Germany will reveal its July current account figures and the headline gauge is projected to decrease to €21.5 billion, down from the €24.4 billion seen previously. Both exports and imports are projected to show stronger figures - 1.4% and 0.5% growth month-on-month respectively, up from the 1.0% and 0.5% dip seen in June.
GDP, German CPI
Later in the day, Eurostat will show its final Q2 GDP data. The preliminary figures missed estimates, as they said that the 19-country euro area grew by 0.3% quarter-on-quarter in the April-June period for a 1.2% growth year-on-year. All of these prints, however, are of lesser significance and most likely won't cause any major reaction on the markets.
Wednesday will bring more important figures in the form of the UK manufacturing production print. The headline gauge is expected to have stayed intact in July at a 0.2% and 0.5% growth on a monthly and annual basis, respectively.
Finally on Friday, Germany's statistical office will publish the final CPI report for August. The preliminary print revealed a slowdown, with the headline gauge flat on a monthly basis and barely growing on the annual basis. The final report will most likely confirm this.
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EUR/USD Forecast Sep. 7-11
EUR/USD saw more storms in the first week of September moving on top tier events from both sides of the Atlantic. A mix of German and French data awaits us now. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Draghi dragged the euro down by lowering forecasts, loosening bond buying rules and getting ready to do more. He elegantly joined the currency wars without committing to a big move. The euro continued trading as a safe haven, rising with stock market falls and falling when things became calmer. PMIs were not so convincing but unemployment fell. Will this continue weighing on the euro? A lot depends on the US, which is awaiting the Fed after the NFP, which was quite mixed. Let’s start:
* All times are GMT
EUR/USD: Euro Halts Recovery as USD Strengthens
The euro's recovery ended on Monday as US non-farm payrolls from Friday proved to be bullish for the USD.
The euro managed to move above $1.11 following an earlier slide below, but the resistance level of $1.1150 remains untouched. Around the time of the European open the euro was moderately flat, down 0.18% at $1.1130.
On the macro front, industrial output in Germany posted 0.7% growth in July, but missed the estimates of 0.9% growth.
Although Asian stocks are set to close with losses, there is a re-newed risk sentiment on the markets and favorable conditions towards the greenback. Moreover, the divergence of monetary policies between Federal Reserve (Fed) and European Central Bank (ECB) came back into focus after last week's ECB meeting. Any sign of tightening of the Fed's monetary policy will keep the euro undermined.
China's National Bureau of Statistics revised on Monday its country's economic growth rate for last year to 7.3% from the previously released figure of 7.4%.
Meanwhile, People's Bank of ChinaGovernor Zhou Xiaochuan said over the weekend at the G-20 meeting in Turkey thatChina's stock market has almost completed its correctionafter a bubble formed in the first half of the year.
China's trade balance is due on Tuesday. "If we cast our minds back a few weeks ago it was the weak July export data to Europe and Japan that prompted the recent move in the trading band of the yuan against the US dollar, and precipitated the current bout of stock market turbulence," Michael Hewson from CMC Markets UK wrote on Monday.
August non-farm payrolls came in some way below consensus, but the underlying data were bullish. There were upward revisions to the previous two months’ data, taking both to 245,000. The US unemployment rate also fell to 5.1% from 5.3%. This puts the unemployment rate in the middle of the Federal Open Market Committee’s (FOMC) 5.0-5.2% estimate of the long-run equilibrium rate. The FOMC has therefore achieved the "full employment" component of its dual mandate. Average hourly earnings also ticked up 0.3% be a 2.2% rise year-on-year.
"US growth is running ahead of the Fed’s projections in June and the unemployment rate has fallen more rapidly than it anticipated. But global financial markets are clearly also more fragile," Kim Martin from BNZ wrote on Monday.
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EUR/USD: Euro Erases Losses, Few Incentives Ahead
The euro managed to recover after Chinese stocks finished lower, easing a bit the renewed risk sentiment and diminishing bids for the USD. Trading is expected to be in a narrow range as the European calender is almost empty while the US is closed for Labor Day.
The euro managed to move past the resistance level of $1.1150, adding 0.12% to $1.1157.
Although Chinese stocks closed with losses, there is renewed risk sentiment on the markets and favorable conditions toward the greenback, following the assurance provided by Chinese authorities over the weekend.
The People's Bank of ChinaGovernor Zhou Xiaochuan said over the weekend at the G-20 meeting in Turkey thatChina's stock market has almost completed its correctionafter a bubble formed in the first half of the year.
"US futures have pushed higher as a result of stability in Chinese markets and I would imagine we could see the probability of a September hike increase a touch when the fed funds futures open. Clarity is what the world wants and clarity was clearly what we didn’t get in Friday’s payrolls," Chris Weston from from IG wrote on Monday.
August non-farm payrollscame in some way below consensus, but the underlying data were bullish. There were upward revisions to the previous two months’ data, taking both to 245,000. The US unemployment rate also fell to 5.1% from 5.3%. This puts the unemployment rate in the middle of the Federal Open Market Committee’s (FOMC) 5.0-5.2% estimate of the long-run equilibrium rate. The FOMC has therefore achieved the "full employment" component of its dual mandate. Average hourly earnings also ticked up 0.3% toe a 2.2% rise year-on-year.
On the macro front, industrial output in Germany posted 0.7% growth in July, but missed the estimates of 0.9% growth.
China's National Bureau of Statisticsrevised on Monday its country'seconomic growth rate for last year to 7.3%, from the previously released figure of 7.4%.
China's trade balance is due on Tuesday. "If we cast our minds back a few weeks ago it was the weak July export data to Europe and Japan that prompted the recent move in the trading band of the yuan against the US dollar, and precipitated the current bout of stock market turbulence," Michael Hewson from CMC Markets UK wrote on Monday.
"What is clear now, though, is that the Fed would be moving the funds rate higher this month if they simply looked at employment as their sole mandate," Weston added.
However, the inflation aspect of the mandate and the unofficial third part of the mandate - stability at an asset level - are absolutely holding them back.
"The Fed simply can’t be dictated to by market; they are supposed to guide rather than being guided. They will simply have to commit by signaling they are ready to hike in October or December, otherwise there will be an outright credibility issue at hand," Weston further said.
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On Friday session the EURUSD pair initially fell but found enough buying pressure to turn around and close in the green near at the middle of the daily range. The currency made a narrow range thus creating an inside day, signs that daily support at 1.1097 is holding the price. Today, September 7th, the US Banks are closed for Labor Day and as a result the pair should stay in a ranging mode.