EUR/USD is unchanged in the Wednesday session. Currently, the pair is trading at 1.1497, down 0.04% on the day. On the release front, there are no key German or eurozone indicators. In Germany, the yield on 10-year bonds rose to 0.55%. On Thursday, the ECB releases the details from its August policy meeting. The U.S releases key inflation indicators this week, starting with Producer Price Index reports. PPI and Core PPI are both expected to post gains of 0.2%, after a decline of 0.1% in the previous release. The U.S. will also publish the Treasury Currency report, a semi-annual publication.
Traders are awaiting the U.S Treasury’s next currency report, which was last released in April. In that report, the U.S did not name any of its major partners as currency manipulators, but it did criticize China for the “non-market direction” of its economy. Since then, the Trump administration has imposed some $200 billion in tariffs on Chinese goods. China has retaliated with its own tariffs on U.S goods, and there has been speculation that China could respond to the U.S tariffs by devaluating the Chinese yuan, in order to bolster Chinese exports. In 2015 and 2016, the markets dropped sharply on fears that China would implement a major devaluation of its currency. The report should be treated as a market-mover.
With the ECB on track to wind up its stimulus program at the end of the year, the markets are focusing on the timing of a rate hike next year. The ECB has stated that it will not raise rates before the “end of the summer”, which many analysts have interpreted as September 2019. However, that time period is not etched in stone, and the ECB could opt to raise rates earlier, if warranted by economic conditions. Besides inflation, ECB policymakers will have to weigh other factors such as the U.S-China trade war when deciding when to raise interest rates.
Wednesday (October 10)
- 2:45 French Industrial Production. Estimate 0.1%. Actual 0.3%
- 4:00 Italian Industrial Production. Estimate 0.7%. Actual 1.7%
- 5:33 German 10-year Bond Auction. Actual 0.55/1.1
- 8:30 US PPI. Estimate 0.2%
- 8:30 US Core PPI. Estimate 0.2%
- 10:00 US Final Wholesale Inventories. Estimate 0.8%
- 13:01 US 10-year Bond Auction
- Tentative – US Treasury Currency Report
- 18:00 US FOMC Raphael Bostic Speaks
Thursday (October 11)
- 7:30 ECB Monetary Policy Meeting Accounts
- 8:30 US CPI. Estimate 0.2%
- 8:30 US Core CPI. Estimate 0.2%
- 8:30 US Unemployment Claims. Estimate 207K
*All release times are DST
*Key events are in bold
EUR/USD for Wednesday, October 10, 2018
EUR/USD for October 9 at 6:55 DST
Open: 1.1490 High: 1.1515 Low: 1.1480 Close: 1.1497
EUR/USD posted small gains in the Asian session but given up these gains in European trade
- 1.1434 is providing weak 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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