EUR/USD is steady in the Wednesday session, after posting slight gains to start the week. Currently, the pair is trading at 1.1541, down 0.29% on the day. On the release front, Eurozone Final CPI edged up to 2.1%, matching the forecast. The EU leaders will hold a 2-day summit in Brussels. In the U.S, the focus is on construction data. Building Permits are expected to rise to 1.28 million, while Housing Starts are forecast to slip to 1.21 million. As well, the Federal Reserve releases the minutes of its September policy meeting. On Thursday, Germany releases WPI and the U.S publishes Philly Fed Manufacturing Index and unemployment claims.
EU leaders had planned to include a draft statement on Brexit at today’s summit, but the lack of progress has shelved that plan. On Tuesday, Michel Barnier, chief Brexit negotiator for the EU, offered to extend the transition phase by 12 months, which would leave it in place until December 2021. This would give the sides more time to work on the proposed customs union as well as the thorny issue of the Irish border. The EU is insisting that it will not sign a withdrawal agreement with Britain, unless there is a backstop which allows Northern Ireland to remain in a customs union with the EU after Brexit. However, the British government is unlikely to agree to such a move, since it would require regulatory barriers within the United Kingdom. With plans for a Brexit statement at Wednesday’s meeting on hold, a Brexit statement with have to wait until EU leaders meet in November or even December, which is uncomfortably close to the Brexit deadline in March 2019.
Confidence in the German economy continues to sputter, as German ZEW Economic Sentiment dropped sharply to -24.7 in October, after a reading of -10.6 a month earlier. The ZEW assessment noted that there is increased pessimism over the German economy due to the escalating trade war between China and the United States. A second factor is worries over Brexit, with fears that the U.K will depart from the EU without an agreement in place. Both issues have dampened export expectations. The indicator finds itself in negative territory for a seventh straight month. Investor sentiment in the eurozone economy also is weak, with the ZEW Economic Sentiment dropping to -19.4, its lowest level since August 2012.
Wednesday (October 17)
- 5:00 Eurozone Final CPI. Estimate 2.1%. Actual 2.1%
- 5:00 Eurozone Final Core CPI. Estimate 0.9%. Actual 0.9%
- Day 1 – EU Economic Summit
- Tentative – German 30-year Bond Auction
- 8:30 US Building Permits. Estimate 1.28M
- 8:30 US Housing Starts. Estimate 1.21M
- 10:30 US Crude Oil Inventories
- 12:10 US FOMC Member Lael Brainard Speaks
- 12:30 German Buba President Weidmann Speaks
- 14:00 US FOMC Meeting Minutes
Thursday (October 18)
- 2:00 German WPI. Estimate 0.4%
- Day 2 – EU Economic Summit
- 8:30 US Philly Fed Manufacturing Index. Estimate 19.7
- 8:30 US Unemployment Claims. Estimate 211K
*All release times are DST
*Key events are in bold
EUR/USD for Wednesday, October 17, 2018
EUR/USD for October 17 at 7:25 DST
Open: 1.1575 High: 1.1580 Low: 1.1531 Close: 1.1541
EUR/USD ticked lower in the Asian session. In European trade, the pair posted small gains but has retracted
- 1.1553 is providing support
- 1.1611 is the next line of resistance
Further levels in both directions:
- Below: 1.1553, 1.1434, 1.1300 and 1.1190
- Above: 1.1611, 1.1735 and 1.1840
- Current range: 1.1553 to 1.1611
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