EUR/USD: Slight Losses As ADP Nonfarm Payrolls Eyed

EUR/USD has edged lower on Wednesday, as the pair trades in the mid-1.36 range in the European session. On the release front, Spanish Unemployment Change posted a sharp decline, but fell short of expectations. In the US, today’s highlight is ADP Nonfarm Payrolls, with the markets expecting a significant improvement in the June reading. As well, Federal Reserve Janet Yellen will speak at the IMF in Washington.

With the ECB holding a policy meeting on Thursday, Eurozone employment numbers are being carefully scrutinized. There was good news on Tuesday, as the Eurozone Unemployment Rate dipped to 11.6%, its lowest level in almost two years. This edged below the estimate of 11.7%. The strong reading could contribute to the ECB deciding to maintain current policy and not introduce a more accommodative monetary stance. At the June meeting, the ECB took unprecedented steps to combat low growth and inflation, including negative deposit rates. In Spain, the Unemployment Change posted an excellent reading, coming in at -122.7 thousand. This was shy of the estimate of -147.3 thousand. Spanish unemployment numbers tend to be very strong in the summer months due to the tourist season.

Weak German data continues to be a concern. The week started with Retail Sales, the primary gauge of consumer spending, posting its third straight decline. The indicator came in at -0.6% last month, well off the forecast of +0.8%. Unemployment Change, which had posted strong declines in the first quarter of the year, has reversed direction and recorded two straight gains, pointing to trouble in the employment sector. In June, the indicator came in at +9K, compared to an estimate of -9K. The euro is sensitive to German data, as Germany is the largest economy in the Eurozone.

Last week’s US GDP release for Q1 was a disaster, as the economy contracted by almost 3%. However, the markets remained calm, and the US dollar escaped without much damage against most of its major rivals. More recent releases have been better, notably consumer confidence and housing data. Pending Home Sales jumped 6.1%, crushing the estimate of 1.4%. This was the strongest gain since May 2013. This reading followed New Home Sales and Existing Home Sales, which both beat their estimates. The markets are keeping a close eye on ADP Nonfarm Payrolls, which is published prior to the official NFP release. The markets are expecting the indicator to improve to 207 thousand, compared to a gain of just 179 thousand a month earlier.

 

EUR/USD for Wednesday, July 2, 2014

EUR/USD July 2 at 9:10 GMT

EUR/USD 1.3663 H: 1.3682 L: 1.3656

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3487 1.3585 1.3651 1.3786 1.3893 1.4000

 

  • EUR/USD was flat in the Asian session. The pair has edged lower in European trading.
  • 1.3651 is under strong pressure. 1.3585 follows.
  • On the upside, 1.3786 is a strong resistance line.
  • Current range: 1.3651 to 1.3786

Further levels in both directions:

  • Below: 1.3651, 1.3585, 1.3487 and 1.3346
  • Above: 1.3786, 1.3893, 1.40, 1.4172

 

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged on Wednesday. This is not consistent with the movement of the pair, as the euro has posted modest losses. The ratio is showing a slight majority of short positions, indicative of a slight trader bias to the US dollar moving higher against the euro.

 

EUR/USD Fundamentals

  • 7:15 Spanish Unemployment Change. Estimate -147.3K. Actual -122.7K.
  • 9:00 Eurozone Final GDP. Estimate 0.2%.
  • 9:00 Eurozone PPI. Estimate 0.1%.
  • 11:30 US Challenger Job Cuts.
  • 12:15 US ADP Nonfarm Employment Change. Estimate 207K.
  • 14:00 US Factory Orders. Estimate -0.4%.
  • 14:30 US Crude Oil Inventories. Estimate -2.2M.
  • 15:00 US Fed Chair Janet Yellen 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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.