The euro continues to have a quiet week. In the Thursday session, EUR/USD is trading at 1.1647, up 0.24% on the day. On the release front, there were a host of Manufacturing PMIs out of the eurozone. German Final Manufacturing PMI remained unchanged at 60.5, just shy of the estimate of 60.6 points. Eurozone Final Manufacturing PMI improved to 58.5, close to the forecast of 58.6 points. German Unemployment Change declined by 10 thousand, close to the estimate of -11 thousand. In the US, today’s highlight is unemployment claims, which is expected to tick upwards to 235 thousand. Employment data will be in the spotlight on Friday, as the US releases Average Hourly Earnings, Nonfarm Payrolls and the unemployment rate. As well, we’ll get a look at ISM Nonfarm Manufacturing PMI.
A strong manufacturing sector has been an important factor in the stronger eurozone economy, and September Manufacturing PMIs continue to point to expansion early in the fourth quarter. The German Manufacturing PMI held at 60.6, its highest level since April 2011. Eurozone Manufacturing PMI isn’t far behind at 58.6, and accelerated for a third straight month. The German employment market remains robust, as unemployment rolls have declined for three straight months. Unemployment rolls have now dropped in all but two readings since June 2015.
There were no surprises from the Federal Reserve on Wednesday, as policymakers held the benchmark rate at 1.25 percent. The Fed indicated that a rate increase is very likely at the December meeting, and was careful not to change any of the wording in its statement regarding future rate hikes. The rate statement noted that hurricanes had caused a decline in payrolls in September, but the Fed did not expect the hurricanes to “materially alter the course of the national economy over the medium term.” The markets appear in line with this sentiment, as the forecast for Friday’s nonfarm payrolls is a robust 311 thousand, after a dismal decline of 33 thousand in September.
The markets have priced in a December rate hike in the US at 96 percent, but what can we expect in 2018? This will depend to a large degree on the new chair of the Fed, who will take over from Janet Yellen in February. Janet Yellen will wind up her 3-year term in February, and she is not expected to be reappointed by President Trump. The front runner is economist Jerome Powell, who is expected to maintain the Fed’s current policy of incremental rates. Trump is expected to make his choice on Thursday, ahead of his trip to Asia.
Thursday (November 2)
- 4:15 Spanish Manufacturing PMI. Estimate 54.8. Actual 55.8
- 4:45 Italian Manufacturing PMI. Estimate 56.6. Actual 57.8
- 4:50 French Final Manufacturing PMI. Estimate 56.7. Actual 56.1
- 4:55 German Final Manufacturing PMI. Estimate 60.5. Actual 60.6
- 4:55 German Unemployment Change. Estimate -10K. Actual -11K
- 5:00 Eurozone Final Manufacturing PMI. Estimate 58.6. Actual 58.5
- Tentative – Spanish 10-year Bond Auction
- Tentative – French 10-year Bond Auction
- 7:30 US Challenger Job Cuts
- 8:30 US Unemployment Claims. Estimate 235K
- 8:30 US FOMC Member Jerome Powell Speaks
- 8:30 US Preliminary Nonfarm Productivity. Estimate 2.5%
- 8:30 US Preliminary Unit Labor Costs. Estimate 0.5%
- 10:30 US Natural Gas Storage. Estimate 63B
- 12:20 US FOMC Member William Dudley Speaks
Friday (November 3)
- 8:30 US Average Hourly Earnings. Estimate 0.2%
- 8:30 US Nonfarm Employment Change. Estimate 311K
- 8:30 US Unemployment Rate. Estimate 4.2%
- 10:00 US ISM Non-Manufacturing PMI. Estimate 58.5
*All release times are GMT
*Key events are in bold
EUR/USD for Thursday, November 2, 2017
EUR/USD for November 2 at 6:40 EDT
Open: 1.1620 High: 1.1672 Low: 1.1613 Close: 1.1647
EUR/USD recorded small losses in the Asian session but has recovered in European trade
- 1.1611 is providing support
- 1.1712 is the next resistance line
Further levels in both directions:
- Below: 1.1611, 1.1489 and 1.1366
- Above: 1.1712, 1.1876, 1.1996 and 1.2018
- Current range: 1.1611 to 1.1712
OANDA’s Open Positions Ratio
EUR/USD is almost unchanged in the Thursday session. Currently, short positions have a majority (62%), indicative of EUR/USD reversing directions and moving upwards.