Euro dips as Fed raises rates, German CPI next

EUR/USD has posted slight losses in the Thursday session, following the trend seen on Wednesday. Currently, the pair is trading at 1.1710, down 0.26% on the day. It’s a busy day on the release front. Germany releases Preliminary CPI, which is expected to post a small gain of 0.1%. Later in the day, ECB President Mario Draghi will speak at a conference in Frankfurt. Over in the U.S, there a host of key indicators. Core durable goods orders and durable goods orders are expected to improve in August, with forecasts of 0.4% and 1.9% percent, respectively. Final GDP is expected to post a strong gain of 4.2% and unemployment claims are forecast to climb to 209 thousand. On Friday, Germany releases unemployment change and the eurozone publishes CPI Flash Estimate, while the U.S releases Personal Spending and UoM Consumer Sentiment.

As widely expected, the Federal Reserve pressed that rate trigger for the third time this year, raising the benchmark rate by a quarter-point, to a range of 2 percent to 2.25 percent. The Fed intends to continue gradually raising rates, with another rate hike expected in December and three hikes in 2019. What was of more interest to investors was the rate statement, in which the Fed removed the word ‘accommodative’ in the statement, which means that the Fed now considers monetary policy to be neutral. Fed Chair Jerome Powell, in a bid to keep markets calm, stated in a follow-up press conference that removing accommodative language in the statement did not reflect a change in policy. Still, the markets were upbeat after the Fed meeting and the U.S dollar has responded with slight gains against the euro on Thursday.

The ECB was not as cheery as the Federal Reserve on Thursday, as the Bank’s economic bulletin said it expected global growth to slow in the near term and warned about the effects of the escalating global trade war. The report highlighted “further tariff increases and uncertainties about future trading relations” as factors which could dampen global growth. Still, with the eurozone economy performing fairly well, the ECB is on track to halve its monthly asset purchases to EUR 15 billion, and wind up the stimulus program in December. Earlier in the week, the ECB released a study which indicated that if the U.S-China trade spat continued, the U.S would be the big loser, as a result of a decrease in trade and weaker investor and consumer confidence.

Euro tumbles on talk Italy to delay budget meeting

Gold rises after limited impact from Fed hike

EUR/USD Fundamentals

Thursday (September 27)

• 2:00 German GfK Consumer Climate. Estimate 10.6. Actual 10.6
• All Day – German Preliminary CPI. Estimate 0.1%
• 4:00 Eurozone M3 Money Supply. Estimate 3.8%. Actual 3.5%
• 4:00 ECB Economic Bulletin
• 4:00 Eurozone Private Loans. Estimate 3.1%. Actual 3.1%
• Tentative – Italian 10-year Bond Auction
• 8:30 US Core Durable Goods Orders. Estimate 0.4%
• 8:30 US Final GDP. Estimate 4.2%
• 8:30 US Durable Goods Orders. Estimate 1.9%
• 8:30 US Final GDP Price Index. Estimate 3.0%
• 8:30 US Goods Trade Balance. Estimate -70.6B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.3%
• 8:30 US Unemployment Claims. Estimate 208K
• 9:30 ECB President Draghi Speaks
• 10:00 US Pending Home Sales. Estimate -0.2%
• 10:30 US Natural Gas Storage. Estimate 64B
• 16:30 US Fed Chair Powell Speaks

Friday (September 28)

• 3:55 German Unemployment Change. Estimate -9K
• 5:00 Eurozone CPI Flash Estimate. Estimate 2.1%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%
• 8:30 US Personal Spending. Estimate 0.3%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 100.5

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, September 27, 2018

EUR/USD for September 27 at 5:50 DST

Open: 1.1740 High: 1.1757 Low: 1.1685 Close: 1.1710

EUR/USD Technical

EUR/USD ticked higher in the Asian session and has edged lower in European trade

• 1.1637 is providing support
• 1.1718 has switched to a resistance role after losses in the Thursday session

Further levels in both directions:

• Below: 1.1637, 1.1553 and 1.1434
• Above: 1.1718, 1.1840, 1.1961 and 1.2055
• Current range: 1.1637 to 1.1718

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