EUR/USD continues to have a quiet week. In the Tuesday session, the pair is trading at 1.1402, down 0.05% on the day. On the release front, Germany and eurozone services PMIs both beat their estimates and pointed to expansion. Eurozone PPI improved to 0.5%, beating the estimate of 0.4%. In the U.S, all eyes will be on the U.S midterm congressional elections. As well, the U.S. releases JOLTS Jobs Openings. On Wednesday, Germany releases industrial production and the eurozone publishes retail sales.
German indicators were lukewarm on Tuesday. Factory orders posted a gain of 0.3% in September, easily beating the forecast of -0.4%. Still, this was a significant drop from the August reading of 2.0%. The trend was similar in the services sector, as Final Services PMI dropped from 55.9 to 54.7 in October, marking a 3-month low. The reading did, however, beat the forecast of 53.6. On Monday, Sentix investor confidence pointed to a sharp drop. The indicator fell from 11.4 to 8.8 points, its lowest level since October 2016. The index has dropped sharply in 2018 – early in the year, the index was above the 30-point level. The eurozone economy slowed to 1.7% in the third quarter, down from 2.2% in the second quarter. There are concerns that the slowdown will continue into Q4, which could weigh heavily on the euro. The currency dropped 2.5% in October, but has started November with modest gains.
The markets are keeping a close eye on the U.S mid-term elections, as voters go to the polls on Tuesday. Many analysts are calling the election a referendum on the presidency of Donald Trump, who has presided over a red-hot economy but has also alienated many voters with his controversial policies on health care and immigration. The labor market is at or beyond capacity, and Friday’s employment numbers underscored the strength of the labor market. Nonfarm payrolls surged to 250 thousand, crushing the estimate of 194 thousand. Wage growth has also strengthened, with strong gains of 3.1% in the past year.
Tuesday (November 6)
- 2:00 German Factory Orders. Estimate -0.4%. Actual 0.3%
- 3:15 Spanish Services PMI. Estimate 51.9. Actual 54.0
- 3:45 Italian Services PMI. Estimate 52.1. Actual 49.2
- 3:50 French Final Services PMI. Estimate 55.6. Actual 55.3
- 3:55 German Final Services PMI. Estimate 53.6. Actual 54.7
- 4:00 Eurozone Final Services PMI. Estimate 53.3. Actual 53.7
- 5:00 Eurozone PPI. Estimate 0.4%. Actual 0.5%
- 10:00 US JOLTS Job Openings
- Tentative – USD IBD/TIPP Economic Optimism. Estimate 59.2
- All Day – US Congressional Elections
- 13:01 US 10-year Bond Auction
Wednesday (November 7)
- 2:00 German Industrial Production. Estimate -0.1%
- 5:00 Eurozone Retail Sales. Estimate 0.1%
- Tentative – German 10-year Bond Auction
*All release times are DST
*Key events are in bold
EUR/USD for Tuesday, November 6, 2018
EUR/USD for November 6 at 5:00 EST
Open: 1.1408 High: 1.1426 Low: 1.1392 Close: 1.1402
EUR/USD ticked lower in the Asian session but has reversed directions and moved higher in European trade
- 1.1300 is providing support
- 1.1434 was tested earlier in resistance
- Current range: 1.1300 to 1.1443
Further levels in both directions:
- Below: 1.1300, 1.1212 and 1.1120
- Above: 1.1434, 1.1553, 1.1685 and 1.1800
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