EUR/USD – Euro ticks lower as German industrial production shrinks

EUR/USD has ticked lower in the Friday session, after gaining ground on Thursday. Currently, the pair is trading at 1.1268, down 0.07% on the day. On the release front, German numbers were a disappointment. Industrial production declined 1.9%, much weaker than the estimate of -0.4%. Germany’s trade surplus narrowed to EUR17.0 billion in April, below the estimate of EUR 18.7 billion. This marked the lowest surplus since July 2018. In the U.S., the focus is on employment numbers. Nonfarm payrolls are expected to fall sharply to 177 thousand, while wage growth is projected to edge up to 0.3%.

The message from the ECB policy meeting was dovish, yet the euro still managed to post considerable gains on Thursday. The ECB surprised the markets by revising its forward guidance, saying that it would not raise interest rates before the middle of 2020. Previously, the bank had said that it would not hike rates prior to the spring of 2020. The delay is a response to weak economic conditions in the eurozone, as the global trade war has taken a toll on manufacturing and exports in Germany and the rest of the bloc.

As expected, ECB President Draghi said that ECB will pay banks to borrow funds from the central bank, if the funds are passed on to consumers and small businesses. This is a stimulus measure with the aim of boosting spending in the private sector. The bank upwardly revised its 2019 outlooks for growth and inflation. In March, the ECB forecast GDP at 1.1% and inflation at 1.2% – these were revised to 1.2% and 1.3%, respectively.

Traders will be keeping a close eye on U.S. nonfarm payrolls for May. Earlier this week, ADP nonfarm payrolls plunged to a paltry 27 thousand for May, down from 275 thousand a month earlier. Will the official release follow suit? The markets are expecting NFP to fall to 177 thousand, compared to 263 thousand a month earlier. If the estimates are on target, the dollar could lose ground in the North American session.

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EUR/USD Fundamentals

Friday (June 7)

• 2:00 German Industrial Production. Estimate -0.4%. Actual -1.9%
  
• 2:00 German Trade Balance. Estimate 18.7B. Actual 17.0B
  
• 2:45 French Industrial Production. Estimate 0.3%. Actual 0.4%
• 2:45 French Trade Balance. Estimate -4.9B. Actual -5.0B
• 4:00 Italian Retail Sales. Estimate 0.2%. Actual 0.0%
• 8:30 US Average Hourly Earnings. Actual 0.3%
• 8:30 US Nonfarm Employment Change. Estimate 177K
• 8:30 US Unemployment Rate. Estimate 3.6%
• 10:00 US Final Wholesale Inventories. Estimate 0.7%
• 15:00 US Consumer Credit. Estimate 11.5B

*All release times are DST

*Key events are in bold

EUR/USD for Friday, June 7, 2019

EUR/USD for June 7 at 5:45 DST

Open: 1.1276 High: 1.1280 Low: 1.1256 Close: 1.1268

EUR/USD Technical

EUR/USD ticked lower in the Asian session and is flat in the European session

• 1.1212 is providing support
• 1.1300 is the next resistance line
• Current range: 1.1212 to 1.1300

Further levels in both directions:

• Below: 1.1212, 1.1120, 1.1046 and 1.0950
• Above: 1.1300, 1.1434 and 1.1553

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