EUR/USD – Euro Close to 1.09, Markets Eye ADP Nonfarm Payrolls

EUR/USD has posted slight losses on Wednesday, as the pair trades slightly above the 1.09 line in the European session. In economic news, German Final Services PMI missed expectations, while Eurozone Services PMI was very close to the forecast. ECB head Mario Draghi will speak at the ECB Forum on Banking Supervision in Frankfurt. In the US, there are three key releases – ADP Nonfarm Payrolls, Trade Balance and ISM Non-Manufacturing PMI. On Thursday, we’ll get an additional look at employment data, with the release of Unemployment Claims.

The euro is struggling to stay above the 1.09 level, and finds itself close to 3-month lows against the dollar. The continental currency was hammered twice in October, following statements from the European and US central banks. In the case of the ECB, it was a hint of further easing in December, while the Fed policy statement said that a rate hike was still on the table in 2015. Fortunately, for the euro, there are no ECB or Fed statements until December. At the same time, the Eurozone continues to suffer from weak growth and a lack of inflation, and unless eurozone releases show marked improvement, the euro will have trouble holding its own against the US dollar.

On Monday, the markets got a look at eurozone manufacturing data. German and Eurozone Manufacturing PMIs came in above the 52 line, indicative of modest growth in the manufacturing sectors. Late last week, Eurozone CPI came in at 0.0% and Core CPI at 1.0%, both within expectations. Still, these figures are far short of the ECB’s inflation target of 2%, leaving the ECB under strong pressure to increase easing and kick-start the weak economy. There was some positive news on the labor front, as the Eurozone unemployment rate dipped to 10.8%, surprising the markets which had forecast 11.0%. The September report marked just the second time that unemployment has been under the 11.0% level in over three years. Another drop in unemployment next month could bolster the euro and ease the pressure on the ECB to increase monetary stimulus.

With the Federal Reserve statement behind us, the markets are once again focused on economic releases. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released last week. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure was much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. Meanwhile, Unemployment Claims beat the estimate for a fourth straight week, coming in at 260 thousand. The estimate stood at 264 thousand. Will the upcoming ADP Nonfarm Payrolls also beat the forecast? The markets are bracing for a reading of 183 thousand, much lower than last month’s figure of 200 thousand.

EUR/USD Fundamentals

Wednesday (Nov. 4)

• 8:00 ECB President Mario Draghi Speaks
• 8:15 Spanish Services PMI. Estimate 55.5 points. Actual 55.9 points
• 8:45 Italian Services PMI. Estimate 53.7 points. Actual 53.4 points
• 8:50 French Final Services PMI. Estimate 52.3 points. Actual 52.7 points
• 8:55 German Final Services PMI. Estimate 55.2 points. Actual 54.5 points
• 9:00 Eurozone Final Services PMI. Estimate 54.2 points. Actual 54.1 points
• 10:00 Eurozone PPI. Estimate -0.4%. Actual -0.3%
• 10:30 FOMC Member Lael Brainard Speaks
• 13:15 US ADP Nonfarm Employment Change. Estimate 183K
• 13:30 US Trade Balance. Estimate -42.7B
• 14:45 US Final Services PMI. Estimate 54.6 points
• 15:00 Federal Reserve Chair Janet Yellen Testifies
• 15:00 ISM Non-Manufacturing PMI. Estimate 56.6 points
• 15:30 US Crude Oil Inventories. Estimate 2.5M
• 19:30 FOMC Member William Dudley Speaks

Upcoming Key Events

Thursday (Nov. 5)

• 13:30 US Unemployment Claims. Estimate 263K

*Key releases are highlighted in bold

*All release times are GMT

EUR/USD for Wednesday, November 4, 2015

EUR/USD November 4 at 10:40 GMT

EUR/USD 1.0923 H: 1.0966 L: 1.0913

EUR/USD Technical

• EUR/USD was uneventful in the Asian session and has posted modest losses in the European session.
• 1.0847 is providing support.
• 1.0941 has switched to a resistance role, as the euro has posted losses.
• Current range: 1.0847 to 1.041

Further levels in both directions:

• Below: 1.0847, 1.0732, 1.0659 and 1.05
• Above: 1.0941, 1.1017, 1.1105, 1.1214 and 1.1296

OANDA’s Open Positions Ratio

EUR/USD ratio  is showing little change, consistent with the lack of significant movement shown by the pair. The ratio is close to even split between long and short positions (52:48), indicating a lack of trader bias as to what direction the pair will take.

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.