EUR/USD is steady on Thursday, after posting six straight losing sessions. Currently, the pair is trading at 1.1503, up 0.21% on the day. On the release front, there are no major German or eurozone events on the schedule. In the U.S, the key event is unemployment claims, which is expected to remain unchanged at 214 thousand. On Friday, Germany releases Factory Orders and PPI. In the U.S, the focus will be on key employment data, with the release of nonfarm payrolls, wage growth and the unemployment rate.
The euro continues to struggle, having declined 2.2% since September 26. A key factor in the current slide is the Italian budget, which the populist government tabled last week. The budget increases spending, lowers taxes and sets the budget deficit at 2.4% of GDP for 2019. Italy has a massive debt, and the European Union doesn’t want Rome to expand the current deficit, which stands at 1.6% of GDP. The populist Italian government appeared to backtrack on Wednesday, and has now said that the budget deficit could be lowered in 2020 and 2021. Still, the budget remains a sore point for the EU, and the euro could lose ground if the EU and Italy remain at loggerheads over Italy’s fiscal policy. The budget must first be approved by Italy’s parliament and then by the European Commission, so this saga is likely to continue for some time.
U.S employment numbers kicked off on a high note, as ADP nonfarm payrolls jumped 230 thousand in September. This marked the strongest increase in private sector jobs since March. The red-hot labor market will have to ease sometime, and the markets are braced for some soft numbers on Friday. Wage growth is expected to drop from 0.4% to 0.3%, while nonfarm payrolls is forecast to fall from 201 thousand to 185 thousand. Traders should be prepared for some movement in the currency markets during Friday’s North American session.
Thursday (October 4)
- 4:46 Spanish 10-year Bond Auction. Actual 1.54/2.4
- 5:02 French 10-year Bond Auction. Actual 0.86/1.6
- 7:30 US Challenger Job Cuts
- 8:30 US Unemployment Claims. Estimate 214K
- 9:15 US FOMC Member Randal Quarles Speaks
- 10:00 US Factory Orders 2.2%
- 10:30 US Natural Gas Storage. Estimate 47B
Friday (October 5)
- 2:00 Germany Factory Orders. Estimate 0.7%
- 2:00 German PPI. Estimate 0.2%
- 8:30 US Average Hourly Earnings. Estimate 0.3%
- 8:30 US Nonfarm Employment Change 185K
- 8:30 US Unemployment Rate. Estimate 3.8%
*All release times are DST
*Key events are in bold
EUR/USD for Thursday, October 4, 2018
EUR/USD for October 4 at 6:05 DST
Open: 1.1479 High: 1.1503 Low: 1.1463 Close: 1.1503
EUR/USD was mostly flat in the Asian session. The pair has edged higher in European trade
- 1.1434 is providing support
- 1.1553 is the next resistance line
Further levels in both directions:
- Below: 1.1434, 1.1300 and 1.1190
- Above: 1.1553, 1.1637, 1.1718 and 1.1840
- Current range: 1.1434 to 1.1553
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