EUR/USD has edged higher on Friday, as the pair trades at 1.0580 in the European session. On the release front, there are just two events on the schedule. Spanish Flash CPI posted a strong gain of 1.5%, above the forecast of 0.9%. Later in the day, the US releases Chicago PMI, with the markets expecting the indicator to dip to 56.5 points.
Trading has been generally uneventful this week, but the euro spiked upwards at the start of the Asian session, when markets are at their thinnest levels. The short-lived spike, known as a ‘flash crash’, saw the euro climb as high as 1.0652 before retracting. There was a similar occurrence with the British pound back in October, in which the currency briefly plunged some 10 percent before recovering.
Looking back at 2016, economic growth in the Eurozone was soft but steady. The third estimate for third quarter GDP was 0.3%, identical to the second quarter expansion. This was not as strong as the first quarter growth of 0.5%. The domestic economy was marked by slow but steady growth, as the Eurozone managed to withstand this year’s political earthquakes, notably the British vote to leave the European Union and the stunning electoral victory of Donald Trump in the US. GDP growth for 2016 is expected at 1.6%, while the forecast for both 2017 and 2018 stands at 1.5%.
With the US economy firing on all cylinders, US consumers are brimming with confidence, in what analysts are describing as a post-election surge in optimism. Recent consumer confidence surveys are pointing upwards, as the US consumer is optimistic that economic conditions will continue to improve under the incoming Trump administration. The CB Consumer Confidence report surged in December to 113.7, its highest level since August 2001. This reading comes on the heels of UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. Both of these well-respected surveys found that consumers are confident that continuing economic growth will create new jobs and raise incomes. Trump’s economic platform remains short on details, but he has promised to cut taxes while increasing public spending. If Trump manages to implement both of these goals, the US economy could heat up and also help global growth pick up speed.
Friday (December 30)
- 8:00 Spanish Flash CPI. Estimate 0.9%. Actual 1.5%
- 14:45 US Chicago PMI. Estimate 56.5
*All release times are GMT
* Key events are in bold
EUR/USD for Friday, December 30, 2016
EUR/USD December 30 at 10:00 GMT
Open: 1.0565 High: 1.0579 Low: 1.0505 Close: 1.0584
- EUR/USD posted slight losses in the Asian session but has reversed directions and is moving upwards in European trade
- 1.0506 is providing support
- 1.0616 has weakened in resistance and could break in the Friday session
Further levels in both directions:
- Below: 1.0506, 1.0414 and 1.0287
- Above: 1.0616, 1.0708 and 1.0873
- Current range: 1.0506 to 1.0616
OANDA’s Open Positions Ratio
EUR/USD ratio continues to show little movement this week. Currently, long positions have a majority (53%), indicative of trader bias towards EUR/USD continuing its upward movement.