EUR/USD – Eurozone PMIs, Job Reports Meet Expectations, Euro Steady

The euro remains is showing marginal movement on Tuesday. EUR/USD is trading at 1.0860 in the European session. On the release front, it’s a very busy day in the Eurozone. Manufacturing PMIs were very close to expectations. German Unemployment Change matched expectations with a decline of 10 thousand. The Eurozone Unemployment Rate dipped to 10.3%, edging below the forecast of 10.4%. On Wednesday, the US releases the ADP Nonfarm Payrolls, with the official Nonfarm Payrolls report to follow on Friday.

The US economy has shown signs of softness in early 2016, and January reports from the housing sector are raising concerns. Housing Starts and Building Applications fell in January, and New Home Sales and Pending Home Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can affect other sectors of the economy. The US manufacturing sector has also struggled, although recent durable goods order were much stronger than expected. The markets will next shift focus to the employment front, starting with the ADP Nonfarm Payrolls. The estimate stands at 185 thousand, much lower than the previous release of 205 thousand.

The markets did a good job in their projections for Eurozone manufacturing and employment data on Monday. Manufacturing PMIs from across the Eurozone were above the 50-point level, which indicates expansion in the manufacturing sector. On the employment front, January’s numbers are giving cause for cautious optimism. German unemployment rolls dipped for a fifth straight month, while the unemployment rate was unchanged at an impressive 6.2%. The Eurozone unemployment rate continues to drop, edging lower to 10.3%. This marked a fifth straight drop by the key indicator. Inflation levels, however, are not looking as good. Eurozone CPI missed expectations and dropped into negative territory in January, with a reading of -0.1%. This figure comes on the heels of weak CPI numbers out of France and Spain, both of which missed expectations. These weak numbers will put increased pressure on ECB head Mario Draghi to take monetary action at the ECB policy meeting in March. Possible monetary moves include adopting negative interest rates (a step recently taken by the BoJ) as well as expanding quantitative easing scheme, which currently involves asset purchases of 60 billion euros/mth. Either of these moves would likely push the euro to lower levels, so the markets will be keeping a close eye on next week’s ECB policy meeting.

Tuesday (Mar. 1)

• 3:15 Spanish Manufacturing PMI. Estimate 54.3 points. Actual 54.1 points
• 3:45 Italian Manufacturing PMI. Estimate 52.2 points. Actual 52.2 points
• 3:50 French Final Manufacturing PMI. Estimate 50.3 points. Actual 50.2 points
• 3:55 German Unemployment Change. Estimate -10K. Actual -10K
• 3:55 German Unemployment Rate. Estimate 6.2%. Actual 6.2%
• 3:55 German Final Manufacturing PMI. Estimate 50.2 points. Actual 50.5 points
• 4:00 Eurozone Final Manufacturing PMI. Estimate 51.0 points. Estimate 51.2 points
• 4:00 Italian Monthly Unemployment Rate. Estimate 11.3%. Actual 11.5%
• 5:00 Eurozone Unemployment Rate. Estimate 10.4%
• 9:45 US Final Manufacturing PMI. Estimate 51.0 points
• 10:00 US ISM Manufacturing PMI. Estimate 48.5 points
• 10:00 US Construction Spending. Estimate 0.5%
• 10:00 US ISM Manufacturing Prices. Estimate 35.5 points

Upcoming Key Events

Wednesday (March 2)

• 8:15 US ADP Non-Farm Employment Change. Estimate 185K

*Key events are in bold

*All release times are EST

EUR/USD for Tuesday, March 1, 2016

EUR/USD March 1 at 4:30 EST

Open: 1.0885 Low: 1.0893 High: 1.0858 Close: 1.0860

EUR/USD Technical

• EUR/USD has shown limited movement in the Asian and European sessions
• 1.0847 is providing weak support
• There is resistance at 1.0941
• Current range: 1.0847 to 1.0941

Further levels in both directions:

• Below: 1.0847, 1.0708 and 1.0616
• Above: 1.0941, 1.1087, 1.1172 and 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement, consistent with the lack of movement from EUR/USD. Long and short positions are close to evenly split, indicative of a lack of trader bias as to what direction the pair will take next.

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.