EUR/USD – Little Activity Ahead of US Nonfarm Payrolls

EUR/USD is almost unchanged on Friday, as the pair trades just above the 1.18 line in the European session. The euro has lost close to 200 points since New Year’s, as the pair finds itself at its lowest levels since December 2009. On the release front, French and German Industrial Production both posted declines. Over in the US, today’s highlight is Non-Farm Employment Change. The markets are expecting the indicator to drop sharply to 241 thousand. The US unemployment rate will also be released, with the estimate standing at 5.7%.

Eurozone manufacturing data was less than impressive on Friday. German Industrial Production for November slipped 0.1%, well of the estimate of a 0.4% gain. In France, Industrial Production posted a second straight decline, coming in at -0.3%. The markets had expected a gain of 0.4%. Trade Balance numbers were a mix, as Germany’s trade surplus of EUR 17.7B was well off expectations, while France’s trade deficit narrowed to EUR -3.2 billion, stronger than expected.

US employment data is in the spotlight on Friday, as the markets wait for the Nonfarm Employment Change and unemployment rate reports for December. Nonfarm Employment Change is one of the most important economic indicators, and traders should treat this event as a market-mover. The indicator had an outstanding reading of 321 thousand in November, but is expected to soften to 241 thousand in December. The unemployment rate has been creeping lower, and is expected to dip to 5.7%, down from 5.8% in November.

The Federal Reserve released the minutes of its previous meeting on Wednesday, with no surprises for the markets. There had been plenty of speculation that the insertion of the word “patience” in the previous policy statement signaled a more aggressive monetary stance. However, the minutes stated that Fed members remained of the view that Fed policy had not changed, and that a rate hike was unlikely before April.  Although economic growth continues to improve, inflation remains at very low levels, which means that the economy is in no danger of overheating, so there is no immediate need for a rate increase.

EUR/USD for Friday, January 9, 2015

EUR/USD January 9 at 9:55 GMT

EUR/USD 1.1814 H: 1.1820 L: 1.1785

EUR/USD Technical

• EUR/USD has showed little movement in the Asian and European sessions, but managed to break above resistance at 1.1802.
• 1.1802 remains busy, and has switched back to a support role. 1.1734 is stronger.
• 1.1926 is a strong resistance line.
• Current range: 1.1802 to 1.1926

Further levels in both directions:

• Below: 1.1802, 1.1734, 1.1634, 1.1525 and 1.1426
• Above: 1.1926, 1.2042, 1.2143 and 1.2286

OANDA’s Open Positions Ratio

EUR/USD is pointing to gains in short positions on Friday, continuing the direction seen a day earlier. This is not consistent with the pair’s movement, as the euro continues to post more losses. The ratio remains close to a split of long and short open positions, indicative of a lack of trader bias towards where the pair is headed next.

EUR/USD Fundamentals

• 7:00 German Industrial Production. Estimate +0.4%. Actual -0.1%.
• 7:00 German Trade Balance. Estimate 19.4B. Actual 17.7B.
• 7:45 French Industrial Production. Estimate +0.4%. Actual -0.3%.
• 7:45 French Trade Balance. Estimate -4.5B. Actual -3.2B.
• 13:30 US Nonfarm Employment Change. Estimate 241K.
• 13:30 US Unemployment Rate. Estimate 5.7%.
• 13:30 US Average Hourly Earnings. Estimate 0.2%.
• 14:00 US Wholesale Inventories. Estimate 0.4%.
• 18:20 US FOMC Member Jeffrey Lacker Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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