EUR/USD – Euro rally stalls on soft manufacturing PMIs

EUR/USD has recorded losses in the Thursday session. Currently, the pair is trading at 1.1564, down 0.27% on the day. In economic news, manufacturing PMIs in Germany and the eurozone softened in July and missed their estimates. In the U.S, unemployment claims are expected to rise to 215 thousand. It’s Day 1 of the Jackson Hole Symposium, a gathering of the heads of major central banks. On Friday, the U.S releases durable goods orders.

Manufacturing PMIs were a sore spot on Thursday, as German and eurozone releases were unexpectedly soft, pulling the euro lower. German Manufacturing PMI dropped from 57.3 to 56.1, while Eurozone Manufacturing PMI fell from 55.1 to 54.6 points. Global trade war tensions, as well as political worries in Italy have dampened the economic outlook in the eurozone, and manufacturing is perhaps the most vulnerable sector to the escalating trade war, notably between the U.S and China. Trade tensions continue to persist between the U.S and the EU as well, despite recent talks between senior officials. On Wednesday, President Trump threatened to slap a 25% tariff on all EU imports.

The Federal Reserve released the minutes of its August meeting, at which policymakers maintained the benchmark rate. The minutes noted that the U.S economy remains strong and hinted that the Fed would raise rates in September. However, policymakers added that there plan to continue with gradual rate increases could have to be halted if the global trade war worsened, as the trade war represented a major downside risk to the U.S economy. Fed Chair Jerome Powell will address the Jackson Hole Symposium on Friday, and investors will be listening carefully. Powell is expected to refer to trade tensions, as well as the fact that inflation and wage growth have lagged, despite a booming U.S economy. The minutes have cemented a rate hike in September, with market odds currently at 96%. The likelihood of a December rate hike stands at 57%.

Aussie drops on Turnbull turbulence

Tariffs support U.S dollar

Thursday (August 23)

• 3:15 French Flash Manufacturing PMI. Estimate 53.5. Actual 53.7
• 3:15 French Flash Services PMI. Estimate 55.1. Actual 55.7
• 3:30 German Buba President Weidmann Speaks
• 3:30 German Flash Manufacturing PMI. Estimate 56.5. Actual 56.1
• 3:30 German Flash Services PMI. Estimate 54.3. Actual 55.2
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 55.1. Actual 54.6
• 4:00 Eurozone Flash Services PMI. Estimate 54.4. Actual 54.4
• 7:30 ECB Monetary Policy Meeting Accounts
• 8:30 US Unemployment Claims 215K
• 9:00 US HPI. Estimate 0.3%
• 9:45 US Flash Manufacturing PMI. Estimate 55.1
• 9:45 US Flash Services PMI. Estimate 55.9
• 10:00 U.S New Home Sales. Estimate 643K
• 10:30 US Natural Gas Storage. Estimate 47B
• Day 1 – Jackson Hole Symposium

Friday (August 24)

• 2:00 German Final GDP. Estimate 0.5%
• 8:30 US Core Durable Goods Orders. Estimate 0.5%
• 8:30 US Durable Goods Orders. Estimate -0.7%
• 10:00 Federal Reserve Chair Powell Speaks
• Day 2 – Jackson Hole Symposium

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, August 23, 2018

EUR/USD for August 23 at 6:40 DST

Open: 1.1596 High: 1.1600 Low: 1.1542 Close: 1.1564

EUR/USD Technical

EUR/USD edged lower in the Asian session. The pair has been mostly flat in European trade

• 1.1553 was tested earlier in support. It remains a weak line
• 1.1637 is the next resistance line

Further levels in both directions:

• Below: 1.1553, 1.1434, 1.1312 and 1.1119
• Above: 1.1637, 1.1718, 1.1840
• Current range: 1.1553 to 1.1637

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