EUR/USD started the trading week on a positive note, as the euro recorded gains against the dollar on Monday. The pair has edged lower on Tuesday, and is trading in the low-1.3000 range in the European session. Eurozone employment numbers, a constant sore spot, have looked positive this week. On Monday, the Eurozone Unemployment Rate dipped lower, and this was followed on Tuesday by a sharp drop in the Spanish Unemployment Change. In the US, the markets will be keeping an eye on Factory Orders.
Eurozone releases have been mostly positive early in the week. On Monday, Spanish, Italian and Eurozone Manufacturing PMIs moved higher. Spanish Manufacturing PMI has been moving higher recently, and reached the 50 level for the first time in two years. A reading above 50 indicates expansion. Italian and Eurozone Manufacturing PMIs also beat their forecasts, but remain under the 50 level. There was some good news on the employment front as well, as the Eurozone Unemployment Rate dipped lower, to 12.1% from 12.3%.
Spanish numbers are looking positive as we start a new month. Spanish Unemployment Change sparkled, dropping by 127.2 thousand. This easily beat the estimate of -83.5 thousand. The markets had expected a strong seasonal reading, but the release exceeded all expectations. However, the unemployment rate in Spain continues to hover around 27%, which is a serious impediment to economic growth. Spanish Services PMI will be released on Wednesday, and the markets are hoping that the good news continues.
Global growth has been sputtering for some time, and there was more bad news on Friday, as an HSBC report downgraded its forecast for global growth. Global GDP was cut from 2.8% to 2.0% in 2013, and from 3.1% to 2.6% in 2014. In its report, HSBC said that it had lowered its forecast due to the US Federal Reserve decision to cut QE, as well as a sharp slowdown in China and other emerging countries such as India and Brazil. The report also revised China’s GDP from 8.2% to 7.4% for 2013 and from 8.4% to 7.4% for next year. Weaker global growth will make it even tougher for the Eurozone economy to get back on its feet and emerge from a harsh recession.
The Greek bailout is back in the news, as there is increasing grumbling in the Eurozone over the lack of progress by Athens in implementing the bailout conditions. The next installment of bailout funds amounts to some EUR 8.1 billion, and is scheduled for delivery in early July. However, the Eurozone feels that Greece is lagging behind in restructuring its public sector, such as tax collection and health care services. Greece has been given a three day ultimatum to assure its creditors that it is keeping its end of the bargain, or the bailout funds could be withheld. Eurozone financial ministers meet on July 8, and will be discussing the Greece bailout.
EUR/USD for Tuesday, July 2, 2013
EUR/USD 1.3025 H: 1.3078 L: 1.3018
EUR/USD has edged lower in the Tuesday session. The pair is receiving support at the critical line of 1.3000. This is a weak line, and could fall if the dollar makes an upward move. Next, there is support at 1.2943. On the upside, 1.3050 is providing resistance. This is followed by a stronger resistance line at 1.3100.
- Current range: 1.3050 to 1.3100
Further levels in both directions:
- Below: 1.3000, 1.2943, 1.2844 and 1.2696
- Above: 1.3050, 1.3100, 1.3162, 1.3271, 1.3353 and 1.3477
OANDA’s Open Positions Ratio
The EUR/USD ratio is unchanged in Tuesday trading. The pair is showing some limited downward movement, as the euro has coughed up the gains it made against the dollar on Monday. A slight majority of positions in the ratio are short, indicating a bias towards the pair continuing to move lower.
EUR/USD has spent most of this week in the low-1.3000 range, and has not been able to sustain any momentum in either direction. The euro has not been able to take advantage of some solid Eurozone releases this week. With no key releases until Wednesday, we could see the pair continue to stay close to the 1.30 line on Tuesday.
- 7:00 Spanish Unemployment Change. Estimate -83.5K. Actual -127.2K.
- 9:00 Eurozone PPI. Estimate -0.2%. Actual -0.3%.
- 14:00 US Factory Orders. Estimate 2.0.%.
- 14:00 US IBD/TIPP Economic Optimism. Estimate 49.3 points.
- All Day – US Total Vehicle Sales. Estimate 15.3M.
- 16:30 FOMC Member William Dudley Speaks.
- 21:45 FOMC Member Jerome Powell Speaks.
*Key releases are highlighted in bold
*All release times are GMT
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.