The euro is flat in Friday trade. Currently, EUR/USD is trading at 1.1873, up 0.01% on the day.
Eurozone data a mixed bag
Eurozone numbers were a mix on Friday. Services PMIs for August in Germany and the eurozone continue to indicate strong expansion in the services sector (60.8 in Germany and 59.0 in the eurozone). Both releases were weaker than in July, but not enough to worry investors and weigh on the euro. The news was less positive from eurozone retail sales. The July reading pointed to a sharp decline of 2.3%, marking a 3-month low.
The euro was unmoved after today’s eurozone events, but could show some volatility after the release of the US nonfarm payrolls reports later today. The US dollar has struggled this week and the currency markets appear ready for a further dollar sell-off today. However, such a move is contingent on a soft reading from today’s nonfarm payrolls report. The consensus is around 750 thousand new jobs, and if the release is higher than expected, we could see a short squeeze on the US dollar. If the reading surprises to the downside, EUR/USD will likely push into 1.19 territory before the weekend.
The Jackson Hole Summit is behind us but the Federal Reserve remains on the minds of investors. Today’s nonfarm payrolls could play a critical role in the timeline of a Fed taper. Fed policy makers have sent a clear message to the markets that they want to see stronger job numbers before tapering, and the million-dollar question is whether today’s NFP will deliver the goods to the Fed’s satisfaction. If the answer is yes, we can expect renewed speculation about an imminent taper, perhaps as early as October. Conversely, a weak reading could result in the Fed delaying plans for a taper, perhaps until after the New Year.
- On the upside, 1.1873 remains fluid. Above, there is resistance at 1.1943
- On the downside, there is support at 1.1834 and 1.1725
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