EUR/USD – Euro Unchanged as German, Eurozone Mfg. PMIs Meet Expectations

EUR/USD continues to hover close to the 1.19 line in the Friday session. Currently, the pair is trading at 1.1924, up 0.03% on the day. On the release front, manufacturing reports were as expected. German Manufacturing PMI improved to 59.3, close to the forecast of 59.4 points. The Eurozone Manufacturing PMI showed a similar trend, rising to 57.4, which matched the estimate. In the US, the focus will be on employment data, with the release of Average Hourly Earnings and Nonfarm Payrolls. This will be followed by ISM Manufacturing PMI.

The German and eurozone manufacturing sectors continued to show strong expansion in August, buoyed by domestic demand as well as a stronger global economy which has increased demand for German and European exports. The sharp readings underscore improvement in the eurozone economy, which has led to speculation that the ECB may taper its ultra-accommodative monetary policy. The bank’s asset purchases program is scheduled to end in December, and analysts expect the ECB to withdraw stimulus in early 2018. Still, the ECB has not provided much guidance as to its plans. ECB President Mario Draghi opted not to discuss monetary policy at last week’s meeting of central bankers at Jackson Hole, which has increased speculation that the issue will be addressed at the bank’s policy meeting on September 7. In June, Draghi spoke in positive terms about the eurozone economy, and the markets seized on his comments and sent the euro soaring. Given this kind of market behavior, any comments about monetary policy at next week’s policy meeting could have a strong impact on the euro.

After a sizzling US GDP report on Wednesday, will we see an encore from wage growth and nonfarm payrolls? The markets are braced for weak readings, with Average Hourly Earnings expected to gain just 0.2%, and nonfarm payrolls forecast to weaken to 180 thousand. If these key reports don’t beat expectations, the US dollar could lose ground. The markets will be keeping a close eye on the wage growth numbers, as a weak number would signify that inflation levels remains soft, and could lower the likelihood of a rate hike in December, which is currently below 40%.

D-Day for NFP: Odds to Disappoint?

EUR/USD Fundamentals

Friday (September 1)

• 3:15 Spanish Manufacturing PMI. Estimate 54.4. Actual 52.4
• 3:45 Italian Manufacturing PMI. Estimate 55.3. Actual 56.3
• 3:50 French Manufacturing PMI. Estimate 55.8. Actual 55.8
• 3:15 German Manufacturing PMI. Estimate 59.4. Actual 59.3
• 4:00 Euro zone Final Manufacturing PMI. Estimate 57.4. Actual 57.4
• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 180K
• 8:30 US Unemployment Rate. Estimate 4.3%
• 9:45 US Final Manufacturing PMI. Estimate 52.5
• 10:00 US ISM Manufacturing PMI. Estimate 56.5
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.4
• 10:00 US Construction Spending. Estimate 0.5%
• 10:00 US ISM Manufacturing Prices. Estimate 61.9
• 10:00 US Revised UoM Inflation Expectations
• All Day – US Total Vehicle Sales. Estimate 16.6M

*All release times are GMT

*Key events are in bold

EUR/USD for Friday, September 1, 2017

EUR/USD Friday, September 1 at 6:40 EDT

Open: 1.1909 High: 1.1930 Low: 1.1879 Close: 1.1914

EUR/USD Technical

EUR/USD posted slight losses in the Asian session and has reversed directions and shown small gains in European trade

• 1.1876 is providing support
• 1.1996 is the next resistance line

Further levels in both directions:

• Below: 1.1876, 1.1712, 1.1616 and 1.1509
• Above: 1.1996, 1.2108 and 1.2221
• Current range: 1.1876 to 1.1996

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Friday session. Currently, long positions have a majority (62%), indicative of EUR/USD breaking out and moving higher.

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.