EUR/USD has moved higher after some sharp swings earlier this week. The pair was in the high-1.30 range in Friday’s European session. In economic news, German inflation numbers disappointed, but the Eurozone Current Account sparkled. In the US, the grim news continues, as Unemployment Claims and the Philly Fed Manufacturing Index missed their estimates. There are no economic releases out of the US on Friday.
The euro has quieted down after some sharp movement earlier in the week. The currency shot up on Tuesday, paying little attention to weak Economic Sentiment numbers out of Germany and the Eurozone. On Wednesday, the euro gave up those gains and then some. The markets reacted negatively to comments by the head of the German central bank, Jens Weidmann, that the ECB could lower rates if economic and inflation data justified such a move. The markets were also unnerved following the release of an IMF report earlier this week. The report found that the Eurozone is the weakest part of the global economy, and called on the ECB to lower interest rates in order to bolster economic growth. The IMF reduced its forecast of Eurozone growth in 2013 from 0.2% to -0.2%, and also downgraded its forecast of German growth from 0.9% to 0.6%.
For those market watchers who were counting on a turnaround from US releases, they’ll have to wait at least until next week, as the US continues to churn out weak economic numbers. Thursday saw more key releases and more bad news, as employment and manufacturing numbers disappointed. Unemployment Claims came in at 352 thousand, higher than the estimate of 349 thousand. The Philly Fed Manufacturing Index dropped from 2.0 points to 1.3 points, nowhere near the estimate of 2.7 points. The weak numbers have dogged the US since March, and are raising red flags about the extent of the US recovery.
The markets are keeping a close eye on the two-day G20 meeting in Washington, which wraps up on Friday. Prior to the meeting, US Treasury Secretary Jack Lew warned against currency devaluations, singling out China. Washington is also concerned about stagnation in the Eurozone, and is urging Germany to take steps to help the Eurozone’s weaker members in Southern Europe, such as Spain, Cyprus and Greece. The slumping yen is also a hot topic, as many of Japan’s trading partners have seen their exports take a hit due to a weaker yen. The G20 often sugar coats criticism of its own members, but we could see the markets react to any statements directed at the Japanese currency.
EUR/USD for Friday, April 19, 2013
1.3094 H: 1.3097 L: 1.3051
EUR/USD has moved higher in Friday trading. On the upside, the pair is testing the 1.31 line, and we could see this line break if the euro continues its upward movement. There is stronger resistance at 1.3170. On the downside, 1.3050 is providing support. The round number of 1.3000 is the next support level.
Current range: 1.3050 to 1.3100
Further levels in both directions:
- Below: 1.3050, 1.30, 1.2960 and 1.2880
- Above: 1.31, 1.3170, 1.3240 and 1.3350
OANDA’s Open Position Ratios
The EUR/USD ratio has reversed course, with movement towards short positions on Friday. We are not seeing this from the pair at present, as the euro has posted modest gains on Friday. However, the activity in the ratio could be an indication that EUR/USD will reverse direction and lose some ground. Meanwhile, short positions enjoy a slight majority in the ratio.
After a roller coaster performance earlier this week, the euro is currently testing the 1.31 line. With no major releases out of the US on Friday, we can expect a fairly quiet end to the trading week.
- 6:00 German PPI. Estimate 0.1%. Actual -0.2%
- 8:00 Eurozone Current Account. Estimate 14.9B. Actual 16.3B
- 11:30 Deutsche Bundesbank President Jens Weidmann Speaks in Washington
- Day 1 – IMF Meetings
- Day 2 – G20 Meetings
- 16:00 US FOMC Member Jeremy Stein Speaks
*Key releases are highlighted in bold
*All release times are GMT
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