EUR/USD is on the move, as the euro continues to post gains in Friday trade. Early in the European session, the pair is trading just shy of the 1.37 line. The euro gained almost 100 points on Thursday, as US Unemployment Claims and retail sales releases missed market expectations. On Friday, German, Italian and French Preliminary GDP all showed improvement in January. We’ll get a look at Eurozone GDP later in the day. In the US, today’s highlight is Preliminary UoM Consumer Sentiment.
The markets had little to cheer about on Thursday as all three US key releases disappointed. Unemployment Claims rose to 337 thousand, above the estimate of 331 thousand. This reading comes on the heels of JOLTS Job Openings earlier in the week, which also missed market expectations. Core Retail Sales dropped to 0.0%, a nine-month low. The estimate stood at 0.1%. Retail Sales brought no relief, slipping to -0.4%, short of the estimate of 0.0%. The euro took full advantage of the news, surging close to 100 points on Thursday.
There was some good news out of the Eurozone on Friday, as Preliminary GDP numbers pointed higher. German GDP gained 0.4%, beating the forecast of 0.3%. French GDP was up 0.3%, above the estimate of 0.2%, while the Italian indicator posted its first gain in almost a year, with a gain of 0.1%, matching the estimate. While not dramatic gains, these figures do point to slight growth in the major Eurozone economies. This will be music to the ears of the ECB, which is grappling with low inflation levels and weak economic activity in the Eurozone.
Federal Reserve chair Janet Yellen, who is brand new on the job, didn’t generate much excitement in the markets when she testified before Congress earlier this week. She said that the Fed plans to continue trimming QE, provided that the employment picture continues to improve and inflation rises. She acknowledged that even though the unemployment rate has improved steadily, the recovery in the labor market is far from complete and the Fed plans to keep interest rates at ultra-low levels. Yellen, who took over as Fed chair on February 1, is expected to continue the policies of her predecessor, Bernard Bernanke.
With the US economy pointed in the right direction, the Federal Reserve has implemented two tapers of $10 billion to the QE scheme, reducing QE to $65 billion each month. We could see another taper when the Fed meets in March. Former Fed chair Bernard Bernanke took his time making the decision, and the taper train will be hard to stop, barring any unexpected downturns in the economy. The Fed plans to wind down QE in $10 billion installments, completing the process by the end of 2014.
EUR/USD for Friday, February 14, 2014
EUR/USD February 14 at 9:00 GMT
EUR/USD 1.3697 H: 1.3717 L: 1.3674
- EUR/USD continues to post gains in Friday trading. The pair pushed above the 1.37 late in the Asian session but has retracted below this level in European trading.
- 1.3649 continues in a support role as the euro trades at higher levels. The next support line is at 1.3585.
- 1.3786 is the next line of resistance. This is followed by resistance at 1.3893.
- Current range: 1.3649 to 1.3786
Further levels in both directions:
- Below: 1.3649, 1.3585, 1.3410, 1.3347 and 1.3255
- Above: 1.3786, 1.3893, 1.4000 and 1.4149.
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in short positions on Friday, continuing the trend we saw a day earlier. Short positions enjoy a strong majority in the ratio, indicative of trader bias towards the dollar reversing directions and moving higher against the euro.
The euro is looking sharp, as it trades close to the 1.37 line on Friday. EUR/USD has edged lower early in the European session.
- 6:30 French Preliminary GDP. Estimate 0.2%. Actual 0.3%.
- 7:00 German Preliminary GDP. Estimate 0.3%. Actual 0.4%.
- 7:45 French Preliminary Nonfarm Payrolls. Estimate -0.1%. Actual +0.1%.
- 9:00 Italian Preliminary GDP. Estimate 0.1%. Actual 0.1%.
- 10:00 Eurozone Flash GDP. Estimate 0.2%.
- 10:00 Eurozone Trade Balance. Estimate. 14.5B.
- 13:30 US Import Prices. Estimate -0.1%.
- 14:15 US Capacity Utilization Rate. Estimate 79.4%.
- 14:15 US Industrial Production. Estimate 0.2%.
- 14:55 US Preliminary UoM Consumer Sentiment. Estimate 80.6 points.
- 14:55 US Preliminary UoM Inflation Expectations.
*Key releases are highlighted in bold
*All release times are GMT
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