The euro is looking upwards at the 1.30 level as we start the new trading week. In Monday’s European session, EUR/USD is trading in the mid-1.29 range. On the release front, German Trade Balance shot higher last month, rising to 22.2 billion euros. The sole US data release of the day is a minor event, Consumer Credit.
US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.
Dramatic and unexpected monetary action by the ECB on Thursday sent the euro reeling below the 1.30 level. The markets had not expected any change to interest rates, but the ECB took the axe for the second time in three months, cutting the benchmark rate to a record low of 0.05%, down from 0.15%. As well, the deposit facility rate was lowered to -0.20% from -0.10% and the marginal lending rate dropped to 0.30% from 0.40%. ECB head Mario Draghi had more in store, saying that the central bank plans to implement an asset purchase program (QE). Draghi didn’t elaborate, saying the ECB would provide more details in October. The interest rate cuts and QE scheme are intended to bolster anemic growth in the Eurozone and combat the growing threat of deflation.
German Trade Balance started off the week in fine fashion, as the trade surplus climbed to EUR 22.2 billion, up from 16.2 billion a month earlier. This easily beat the estimate of 17.3 billion. The strong figure follows impressive German manufacturing data last week. Industrial Production gained 1.9%, its strongest showing in 2014. This handily beat the estimate of 0.5%. Factory Orders sparkled with a 4.6% last month, its highest gain since November 2011. This easily beat the estimate of 1.6%, and follows two straight declines.
EUR/USD for Monday, September 8, 2014
EUR/USD September 8 at 9:20 GMT
EUR/USD 1.2946 H: 1.2959 L: 1.2931
- EUR/USD has shown little change in the Asian and European sessions.
- 1.2984 is an immediate resistance line. 1.3104 is stronger.
- 1.2905 is providing weak support. 1.2806 is the next support level.
- Current range: 1.2905 to 1.2984
Further levels in both directions:
- Below: 1.2905, 1.2806, 1.2688 and 1.2518
- Above: 1.2984, 1.3104, 1.3175 and 1.3288
OANDA’s Open Positions Ratio
EUR/USD ratio is almost unchanged on Monday. This is consistent with the lack of movement we are seeing from EUR/USD. The ratio continues to show a strong majority of long positions, indicative of trader bias towards the euro breaking out and moving to higher ground.
- 6:00 German Trade Balance. Estimate 17.3B. Actual 22.2B.
- 8:30 Eurozone Sentix Investor Confidence. Estimate 3.2 points. Actual -9.8 points.
- 12:45 US Treasury Secretary Jack Lew Speaks.
- 19:00 US Consumer Credit. Estimate 17.4B.
*Key releases are highlighted in bold
*All release times are GMT