EUR/USD – Euro Hugging 1.16, US Jobless Claims Next

The euro continues to have a quiet week, as it stays close to the 1.16 line. In the Thursday session, EUR/USD is trading at 1.1607, up 0.11% on the day. On the release front, Germany’s trade surplus improved to EUR 21.8 billion, easily beating the forecast of EUR 21.6 billion. The EU will release its economic forecast, which provides analysis and economic activity of the 28 EU members. In the US, today’s key highlight is unemployment claims, which is expected to edge higher to 232 thousand. On Friday, the US releases Preliminary UoM Consumer Sentiment.

German coalition talks are gaining steam, as President Angela Merkel has convinced potential partners to drop key demands. Merkel’s conservative bloc saw its support erode in the election, and needs the support of two smaller parties – the Greens and the liberal FDU. After intense negotiations, the Greens have dropped a demand on the phase-out of fossil fuels. The FDU wanted to lower taxes by 30-40 billion euros, but has agreed to more moderate tax cuts. Merkel has been under pressure from her own bloc to tighten immigration policy, but the Greens are opposed to such a move. If the talks continue to progress, Merkel could have a government in place in December.

After failing to pass a new healthcare act, President Trump has his sights set on tax reform, a key item in his domestic platform. Trump wants Congress to pass legislation overhauling the tax code before the end of the year, but that could prove to be too tight of a deadline. Most Democrats have come out against the proposal, and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. The bill is presently being debated in a congressional committee and is expected to move to the House floor next week. The Senate will present its version of the bill on Thursday, so we can expect plenty of activity in Congress in the next few weeks. Tax reform faces an uphill battle, which has weighed on investor risk appetite and pushed gold prices higher.

The US labor market remains very strong, and this was reflected in another sharp employment report on Tuesday. JOLT Jobs Openings was almost unchanged at 6.09 million, easily beating the forecast of 5.98 million. Unemployment claims are also expected to show little movement on Thursday, with a forecast of 232 thousand. The unemployment rate is at a sizzling 4.1%, but wage growth remains a concern, reflective of weak inflation. In October, Average Hourly Earnings posted a flat 0.0%, the first time wages have not increased since November 2016.

EUR/USD Fundamentals

Thursday (November 9)

• 2:00 German Trade Balance. Estimate 21.0B. Actual 21.8B
• 4:00 ECB Economic Bulletin
• 5:00 EU Economic Forecasts
• 8:30 US Unemployment Claims. Estimate 232K
• 10:00 US Final Wholesales Inventories. Estimate 0.3%
• 10:30 US Natural Gas Storage. Estimate 15B
• 13:01 US 30-year Bond Auction

Friday (November 10)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 100.8

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, November 9, 2017

EUR/USD for November 9 at 5:45 EDT

Open: 1.1594 High: 1.1616 Low: 1.1586 Close: 1.1607

EUR/USD Technical

EUR/USD has shown little movement in the Asian and European sessions

• 1.1574 remains a weak support line
• 1.1657 is the next resistance line

Further levels in both directions:

• Below: 1.1574, 1.1489, 1.1366 and 1.1268
• Above: 1.1657, 1.1777 and 1.1876
• Current range: 1.1574 to 1.1657

OANDA’s Open Positions Ratio

EUR/USD remains unchanged this week. Currently, short positions have a majority (62%), indicative of EUR/USD reversing directions and moving downwards.

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