EUR/USD is unchanged today after a nasty two-day slide, trading at 0.9792 in the European session. The euro flirted with the symbolic parity line on Wednesday, but then plunged 200 points.
German retail sales underperforms
Germany wrapped up the week with soft data, although the euro shrugged off the weak numbers. Retail sales fell 1.3% in August, following a 0.7% gain in June and below the consensus of -1.0%. Industrial Production came in at -0.8% in August, following the July reading of -0.3% and missing the forecast of -0.5%. Like the rest of the eurozone, Germany is struggling with the unhappy combination of weak growth and soaring inflation, which hit a record 10% in September. The catalyst behind soaring inflation has been energy prices, which have skyrocketed as Russia has sharply reduced energy exports to Europe. How bad is the energy crisis? Eurozone energy prices jumped a staggering 40.8% in September, following 38.6% in August, according to Eurostat.
The ECB will have some time to digest key economic data, as the next policy meeting is not until October 27th. The central bank showed up late to the global rate-tightening dance, and the current benchmark rate of 1.25% lags behind other central banks and will not have much impact on soaring inflation. With inflation accelerating to 10.0% in September, up from 9.1%, it’s likely that the ECB will deliver a second-straight rate increase of 0.75% at the October meeting.
The US nonfarm payroll report was a bit stronger than expected, at 263,000. This was down from 300,000 but beat the consensus of 250,000. Wage growth remained strong at 5.0%, edging down from 5.2% prior and just below the consensus of 5.1%. The US dollar has responded with broad gains, as the strong data support further outsized rate hikes from the Federal Reserve in order to curb inflation.
- EUR/USD faces resistance at 0.9846 and 0.9925
- There is support at 0.9731 and 0.9608
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at email@example.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.