EUR/USD continues to have a quiet week, as the markets look for economic cues. There are no major Eurozone releases scheduled until Thursday. German Import Prices declined 0.1%, marking the first decline in four months. The Eurozone M3 Money Supply climbed 5.1%, above the forecast of 4.9% and its highest gain since November 2015. This better-than-expected reading could signal stronger inflation levels in the Eurozone, which has been struggling with weak inflation numbers. In the US, we’ll get a look at CB Consumer Confidence, a key consumer indicator. The estimate for the September report stands at 98.6 points.
The euro showed a muted reaction to the Federal Reserve decision last week, but has steadily moved upwards, gaining about 100 points in the past week. EUR/USD continued the upward movement on Monday and touched 1.1279, marking a 10-day high. The Fed decision to maintain interest rates at 0.25% was widely expected, but there was some drama as three of the ten FOMC members dissented with the decision, preferring to raise rates immediately by a quarter-percentage point. This significant dissent within the FOMC underscores continuing divisiveness within the Fed, with one economist calling the Fed decision “one of the most decisive FOMC meetings in recent memory”. Recent comments from FOMC members regarding a rate hike have conflicted with each other, and the mixed messages have left the markets confused. The surprising level of dissent will do little to restore market confidence in the Fed, which back in December 2015 promised up to four rate hikes in 2016, but so far has yet to raise rates this year.
The Fed policy statement was generally upbeat and broadly hinted at a December rate hike. However, the markets can be forgiven for remaining somewhat skeptical, as the Fed has previously talked about a strong US economy and failed to follow up with a rate hike. Currently, a rate hike is priced in at 51 percent, but plenty can happen until the December policy meeting (the Fed is unlikely to make a move in November, just ahead of the US presidential election). The Fed has consistently stated that the next rate hike will be data-dependent, which means that stronger economic numbers, especially on the inflation front, will increase the likelihood of a December hike.
Tuesday (September 27)
- 6:00 German Import Prices. Estimate -0.1%. Actual -0.2%
- 8:00 Eurozone M3 Money Supply. Estimate 4.9%.Actual 5.1%
- 8:00 Eurozone Private Loans. Estimate 1.9%. Actual 1.8%
- 13:00 US S&P/CS Composite-20 HPI. Estimate 5.0%
- 13:45 US Flash Services PMI. Estimate 51.1
- 14:00 US CB Consumer Confidence. Estimate 98.6
- 14:00 US Richmond Manufacturing Index. Estimate -2
- 15:15 US FOMC Member Stanley Fischer Speaks
*All release times are EDT
* Key events are in bold
EUR/USD for Tuesday, September 27, 2016
EUR/USD September 27 at 9:10 GMT
Open: 1.1250 High: 1.1259 Low: 1.1234 Close: 1.1245
- EUR/USD has been flat in the Asian and European sessions
- There is resistance at 1.1278
- 1.1150 is providing strong support
Further levels in both directions:
- Below: 1.1150, 1.1054, 1.0957 and 1.0821
- Above: 1.1278, 1.1376 and 1.1467
- Current range: 1.1150 to 1.1278
OANDA’s Open Positions Ratio
EUR/USD ratio is almost unchanged in the Tuesday session. Currently, short positions have a majority (57%), indicative of trader bias towards EUR/USD breaking out and moving lower.
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