EUR/USD Slips as German Retail Sales Falters

EUR/USD has posted slight gains in the Thursday session. Currently the pair is trading at 1.1860, down 0.21% on the day. On the release front, German Retail Sales declined 1.2%, weaker than the estimate of -0.5%. Euro zone CPI Flash Estimate accelerated to 1.5%, edging above the forecast of 1.4%. In the US, unemployment claims are expected to rise slightly to 237 thousand. As well, Personal Spending is expected to improve to 0.4%. On Friday, the US releases key employment data. Average Hourly Earnings is expected to edge lower to 0.2%, and the markets are braced for Nonfarm Employment Change to drop to 180 thousand.

US numbers looked sharp on Wednesday, and the dollar responded with considerable gains against the euro. Preliminary GDP (second estimate) for the second quarter was revised to 3.0%, a marked improvement from the first estimate of 2.6%. Consumer confidence and spending remain strong and helped contribute to the strong GDP report, as the economy posted its strongest gain since the first quarter of 2015. However, solid consumer spending has failed to boost inflation, which continues to hover at low levels. The lack of inflation could hamper the Federal Reserve’s plans to raise interest rates, with the likelihood of a rate hike in December standing at just 35%. On the employment front, ADP Nonfarm Payrolls jumped to 237 thousand, marking a 3-month high. The official Nonfarm Payrolls report will be released on Friday, and if this indicator also beats the forecast, it would be a strong signal that the economic momentum has continued into the third quarter.

The euro has enjoyed a strong run against in the dollar in recent months, jumping 12.0% since April 1. On Tuesday, the currency pushed above the 1.20 level for the first time since January 2015. The euro has benefited from stronger growth in the eurozone in 2017, led by robust growth in Germany. As well, investors are anticipating that the ECB will provide some guidance on plans regarding its asset purchase program (QE), which is scheduled to terminate in December. The ECB is widely expected to taper its QE program early next year, but so far has been mum about its plans. ECB President Mario Draghi opted not to discuss monetary policy at last week’s meeting of central bankers at Jackson Hole, which has increased speculation that the issue will be addressed at the bank’s policy meeting on September 7.

EUR/USD Fundamentals

Thursday (August 31)

• 2:00 German Retail Sales. Estimate -0.5%. Actual -1.2%
• 2:45 French Preliminary CPI. Estimate 0.5%. Actual 0.5%
• 3:55 German Unemployment Change. Estimate -5K. Actual -6K
• 4:00 Italian Monthly Unemployment Rate. Estimate 11.1%. Actual 11.3%
• 5:00 Euro zone CPI Flash Estimate. Estimate 1.5%. Actual 1.4%
• 5:00 Euro zone Core CPI Flash Estimate. Estimate 1.2%. Actual 1.2%
• 5:00 Italian Preliminary CPI. Estimate 0.2%. Actual 0.2%
• 5:00 Euro zone Unemployment Rate. Estimate 9.1%. Actual 9.1%
• 7:30 US Challenger Job Cuts
• 8:30 US Unemployment Claims. Estimate 237K
• 8:30 US Core PCE Price Index. Estimate 0.1%
• 8:30 US Personal Spending. Estimate 0.4%
• 8:30 US Personal Income. Estimate 0.3%
• 9:45 US Chicago PMI. Estimate 58.7
• 10:00 US Pending Home Sales. Estimate 0.4%
• 10:30 US Natural Gas Storage. Estimate 33B

Upcoming Key Events

Friday (September 1)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 180K
• 8:30 US Unemployment Rate. Estimate 4.3%
• 10:00 US ISM Manufacturing PMI. Estimate 56.5
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.4

*All release times are GMT

*Key events are in bold

EUR/USD for Thursday, August 31, 2017

EUR/USD Thursday, August 31 at 6:40 EDT

Open: 1.1842 High: 1.1906 Low: 1.1844 Close: 1.1860

EUR/USD Technical

EUR/USD is showing limited movement in the Asian and European sessions

• 1.1712 is providing support
• 1.1876 was tested earlier in resistance and is a weak line

Further levels in both directions:

• Below: 1.1712, 1.1616 and 1.1509
• Above: 1.1876, 1.1996, 1.2108 and 1.2221
• Current range: 1.1712 to 1.1876

OANDA’s Open Positions Ratio

EUR/USD ratio is showing movement towards short positions. Currently, long positions have a majority (60%), indicative of EUR/USD continuing to move higher.

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.