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EUR/USD – Slight Gains As Spanish Employment Data Sparkles

The euro has posted modest gains on Tuesday, as the pair trades in the mid-1.35 range. There was excellent news out of Spain, as Spanish Employment Change posted a slight decline, surprising the markets. In the US, the ISM Manufacturing PMI climbed to its highest level since April 2011. Tuesday has a light schedule, with no major releases out of the US.

For the first time in the month of November, Spanish unemployment claims declined. The key indicator posted a decline of 2.5 thousand, surprising the markets, which had forecast a gain of 49.3 thousand. This was the first drop since July. Traditionally, the summer months show a decline due to the influx of tourists, so the November release was a pleasant surprise. Now the big question is whether the unemployment rate, which stands at a staggering 26%, will follow suit and show some improvement.

Eurozone PMIs, an important gauge of economic activity, were a mix on Monday. Spanish Manufacturing PMI had a dismal October, sliding to 48.6 points from 50.9 last month. This marked the first contraction we’ve seen in the manufacturing sector in six months. There was better news from the Italian and Eurozone Manufacturing PMIs, both of which rose slightly and met expectations. The Italian release came in at 51.4 points, while the Eurozone PMI hit 51.6 points.

With inflation and growth remaining weak in the Eurozone, the ECB may make a monetary move later this week. It could opt to cut the benchmark rate for a second straight month, or lower the deposit rate, which currently stands at 0.0%. However, a move into negative territory would represent unchartered territory and could have negative consequences for the economy. If the ECB decides to reduce the deposit rate, we could see a “mini cut” of less than 0.25%. The markets are expecting the Bank to hold the current benchmark rate of 0.25%, but just last month the markets were caught by surprise as the ECB cut the rate from 0.50%.

Over in the US, the markets will be keeping close tabs on this week’s US employment releases, as the Fed is likely to pull the taper trigger early in 2014 if employment numbers continue to improve. Unemployment Claims have looked sharp for the past two releases, and if the Non-Farm Payrolls and Unemployment Rate follow suit this week, the US dollar could gain ground against the euro.

 

EUR/USD for Tuesday, December 3, 2013

Forex Rate Graph 21/1/13

EUR/USD December 3 at 11:20 GMT

EUR/USD 1.3565 H: 1.3576 L: 1.3524

 

EUR/USD Technical

S3 S2 S1 R1 R2 R3
1.3325 1.3410 1.3500 1.3585 1.3649 1.3786

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

EUR/USD ratio has reversed directions in Tuesday trading and is pointing to gains in long positions. This is reflected in the pair’s movement, as the euro has posted gains against the dollar. A large majority of the open positions remain short, indicative of a trader bias towards the dollar reversing directions and posting gains against the euro.

The euro has posted slight gains on Tuesday. With no major events out of the US on the day’s schedule, it could be an uneventful day for EUR/USD.

 

EUR/USD Fundamentals

 

*Key releases are highlighted in bold

*All release times are GMT

 

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.

 

Kenny Fisher

Kenny Fisher [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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