EUR/USD – Euro Moves Higher as German Factory Report Sparkles

EUR/USD has posted gains in the Thursday session. Currently, the pair is trading at 1.1687, up 0.27% on the day. On the release front, German Factory Orders jumped 2.6%, crushing the estimate of 1.1%. Eurozone Retail PMI ticked higher to 51.8 points. In the U.S, ADP nonfarm payrolls is expected to rise to 190 thousand, while unemployment claims are forecast to edge lower to 225 thousand. The Federal Reserve will release the minutes of the June policy meeting. On Friday, the U.S releases official nonfarm payrolls and wage growth.

Investors are keeping an eye on the FOMC minutes from the June meeting, which will be published on Thursday. The minutes could be a market-mover, as the Federal Reserve raised rates at the meeting for the second time this year. How many more hikes will we see in 2018? Policymakers appear split between three and four moves, as the U.S economy is booming, but the threat from escalating trade tensions has the Fed concerned. Investors will be looking for clues from the minutes as to Fed monetary policy in the second half of 2018. If the minutes are hawkish, the dollar could see some gains during the North American session.

The escalating trade war between the U.S and the EU has raised concerns that the eurozone export sector could hit some significant headwinds. President Trump has threatened to impose tariffs of 20 percent on European car imports if the EU does not remove their tariffs on U.S. automobiles. The EU would clearly prefer not to engage in a full-blown tariff war with the United States. European officials are examining the possibility of a tariff-cutting agreement between the world’s largest car exporters. In essence, this would allow the EU and the U.S to reach a deal on automobile tariffs without going through the World Trade Organization.

Early in the week, German manufacturing PMIs pointed to expansion, but also continued a troubling downward trend, falling for a sixth straight month. This trend has raised concerns about the strength of the manufacturing sector. Still, there was good news on Thursday, as Factory Orders sparkled, with a gain of 2.6%. This strong reading comes after two straight declines.

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EUR/USD Fundamentals

Thursday (July 5)

• 1:58 German Factory Orders. Estimate 1.1%. Actual 2.6%
• 4:10 Eurozone Retail PMI. Actual 51.8
• 4:48 Spanish 10-year Bond Auction. Actual 1.58/1.9
• 4:59 French 10-year Bond Auction. Actual 0.67/1.9
• 7:15 German Buba President Weidmann Speaks
• 7:30 US Challenger Job Cuts
• 8:15 US ADP Nonfarm Employment Change. Estimate 190K
• 8:30 US Unemployment Claims. Estimate 225K
• 9:45 US Final Services. Estimate 56.5
• 10:00 US ISM Non-Manufacturing PMI. Estimate 58.3
• 11:00 US Crude Oil Inventories. Estimate -4.4M
• 14:00 US FOMC Meeting Minutes

Friday (July 6)

• 2:00 German Industrial Production. Estimate 0.3%
• 8:30 US Average Hourly Earnings. Estimate 0.3%
• 8:30 US Nonfarm Employment Change. 195K
• 8:30 US Unemployment Rate. Estimate 3.8%

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, July 5, 2018

EUR/USD for July 5 at 7:00 DST

Open: 1.1656 High: 1.1711 Low: 1.1650 Close: 1.1687

EUR/USD Technical

EUR/USD was flat in the Asian session and has posted slight gains in European trade

• 1.1637 is providing support
• 1.1728 is the next resistance line

Further levels in both directions:

• Below: 1.1637, 1.1553, 1.1434 and 1.1312
• Above: 1.1728, 1.1829 and 1.1910
• Current range: 1.1637 to 1.1728

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