EUR/USD – Euro Jumps As ECB Maintains Rates

EUR/USD is steady in Friday trading after posting sharp gains on Thursday. The pair is trading in the mid-1.36 range in Friday’s European session. As expected, the ECB maintained interest rates at 0.25% at its Thursday policy meeting. Over in the US, unemployment claims dropped for the third straight week. There is only one Eurozone release on Friday, German Factory Orders. It’s a busy day in the US, with three major releases – Non-Farm Payrolls, Unemployment Rate and UoM Consumer Sentiment.

As expected, the ECB held course on Thursday and did not reduce interest rates, which remain at the record low of 0.25%. As well, the deposit rate remains at 0.0%. At a follow-up press conference, ECB head Mario Draghi said that the Bank would continue its accommodative policy stance and that interest rates would remain at current or lower levels for some time. He noted that there had been some discussion at the policy meeting about lowering the deposit rate. As for projected growth for the Eurozone, Draghi said that the ECB forecast for 2013 remains at -0.4%, with the 2014 forecast raised slightly to 1.1%, up from 1.0%. The euro improved sharply, gaining close to one cent on Thursday.

Over in the US, employment numbers continue to show improve, as Unemployment Claims dropped for the third consecutive week. The key indicator dropped from 316 to 298 thousand, easily beating the estimate of 328 thousand and posting a two-month low. There was further good news, as GDP shot up 3.6% in Q3. On Friday, we’ll get a look at Non-Farm Payrolls and the Unemployment Rate. If these indicators point upwards, we could see the US dollar reverse directions and post gains against the euro.

Eurozone PMIs continue to show a mixed picture. Earlier in the week, Spanish Services PMI looked sharp in November, as the index climbed to 51.5 points, up from 49.6 the month before. This was the PMI’s highest level in over six years. Italian Services PMI took the opposite route, dropping to 47.2 points, compared to 50.5 in the previous reading. The Eurozone Manufacturing PMI remained steady, coming in at a healthy 51.6 points. PMI data is an important gauge of economic activity and can affect the movement of EUR/USD.

Meanwhile, for the first time in the month of November, Spanish unemployment claims declined. The key indicator posted a decline of 2.5 thousand, surprising the markets, which had forecast a gain of 49.3 thousand. This was the first drop since July. Traditionally, the summer months show a decline due to the influx of tourists, so the November release was a pleasant surprise. Now the big question is whether the unemployment rate, which stands at a staggering 26%, will follow suit and show some improvement.

EUR/USD for Friday, December 6, 2013

EUR/USD December 6 at 10:30 GMT

EUR/USD 1.3667 H: 1.3675 L: 1.3551

EUR/USD Technical

• EUR/USD is showing little movement on Friday.
• On the downside, 1.3649 has reverted to a support level following strong gains by the pair. This is a weak line which could face pressure during the day. This is followed by support at 1.3585.
• The pair is facing resistance at 1.3786. This is followed by a resistance line at 1.3893, which has remained intact since October 2011.
• Current range: 1.3649 to 1.3786

Further levels in both directions:

• Below: 1.3649, 1.3585, 1.3500, 1.3410 and 1.3325
• Above: 1.3786, 1.3893, 1.4000 and 1.4140

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions on Friday. This is not reflected in the pair, which has shown almost no movement. A large majority of the open positions remain short, indicative of a trader bias towards the dollar breaking out and posting gains against the euro.

The pair is trading very quietly in Friday trading. This could change later in the day, when the US releases key employment and consumer confidence data later on.

EUR/USD Fundamentals

• 7:45 French Government Budget Balance. Actual -86.0B.
• 7:45 French Trade Balance. Estimate -5.1B. Actual -4.7B.
• 11:00 German Factory Orders .Estimate -0.4%.
• 13:30 US Non-Farm Employment Change. Estimate 180K.
• 13:30 US Unemployment Rate. Estimate 7.2%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 13:30 US Core PCE Price Index. Estimate 0.1%.
• 13:30 US Personal Spending. Estimate 0.3%.
• 13:30 US Personal Income. Estimate 0.3%.
• 14:55 US UoM Preliminary Consumer Sentiment. Estimate 76.2 points.
• 14:55 US UoM Preliminary Inflation Expectations.
• 20:00 US FOMC Member Charles Evans Speaks.
• 20:00 US Consumer Credit. Estimate 14.6B.

*Key releases are highlighted in bold

*All release times are GMT

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