EUR/USD – Euro Dips, US Jobless Claims Next

EUR/USD has posted gains on Thursday, erasing the losses which marked the Wednesday session. The pair is trading at 1.1360. In economic news, German Trade Balance improved to EUR 21.4 billion, beating expectations. ECB President delivered remarks at the Brussels Economic Forum. In the US, today’s highlight is Unemployment Claims. The markets are not expecting much change from the previous release, with an estimate of 269 thousand. On Friday, the US will release UoM Consumer Sentiment, with the indicator expected to dip to 94.1 points.

After several soft employment numbers, there was growing unease about the strength of the US labor market. On Friday, Nonfarm Payrolls plunged to a paltry 38 thousand, shocking the markets and sending the US dollar tumbling. On Monday, the Labor Market Conditions Index dropped 4.9 points, marking a fourth consecutive decline. This was followed by Revised Nonfarm Productivity, which dropped 0.6%. The markets were braced for a weaker reading from JOLTS Job Openings on Wednesday, but the indicator improved to 5.79 million, easily beating the forecast of 5.67 million. We’ll get a look at Unemployment Claims on Thursday, with the estimate standing at 269 thousand, little changed from the previous reading.

ECB President Mario Draghi spoke at the Brussels Economic Forum on Thursday. Draghi said that years of poor growth had hurt the bloc’s productivity and warned that urgent action was needed in order to prevent the economy suffering permanent damage. Draghi said that monetary policy was not enough and structural reform was urgently needed. At last week’s ECB’s policy meeting, Draghi sounded more optimistic about the economy, noting that growth had improved in the first quarter, as the ECB revised its GDP forecast for 2016 slightly upwards, to 1.6%. The threat of deflation continues, as inflation levels have failed to respond to aggressive action by the ECB, which has cut the benchmark rate to 0.00% and increased the QE program to EUR 80 billion/mth. On Wednesday, the ECB implemented a corporate sector asset purchasing program, which the central bank hopes will bolster inflation rates.

On Wednesday, the ECB released its annual report on the euro, which examined the role of the currency in the global financial system. According to the ECB, the euro’s importance declined in 2015, continuing a trend which has resulted from ultra-low interest rates and negative yields. This marked a sixth straight annual decline in global use of the euro. The ECB found that the “euro remained the second-most important currency in the international monetary system, but with a significant gap to the US dollar”. In 2015, the dollar was used in 43% of global payments, followed by the euro, with a 28.4% market share. The ECB said that “official holders of foreign-exchange reserves have increasingly diversified into non-traditional reserve currencies since the onset of the financial crisis”. The ECB also took note of China’s greater involvement in the currency markets, suggesting that one reason for the fall in euro currency reserves could be the fact that China has started to report some of its currency holdings to the IMF.

EUR/USD Fundamentals

Thursday (June 9)

• 5:30 French Final Nonfarm Payrolls. Estimate 0.2%. Actual 0.3%
• 6:00 German Trade Balance. Estimate 21.4B. Actual 24.0B
• 7:00 ECB President Mario Draghi Speaks
• 8:00 Italian Quarterly Unemployment Rate. Estimate 11.6%. Actual 11.6%
• 12:30 US Unemployment Claims. Estimate 269K
• 14:00 US Wholesale Inventories. Estimate 0.1%
• 14:30 US Natural Gas Storage. Estimate 80B
• 17:01 30-year Bond Auction

Upcoming Key Events

Friday (June 10)

• 14:00 US Preliminary UoM Consumer Sentiment. Estimate 94.1 points

* Key releases are in bold

*All release times are GMT

EUR/USD for Thursday, June 9, 2016

EUR/USD June 9 at 9:50 GMT

Open: 1.1403 Low: 1.1350 High: 1.1415 Close: 1.1361

EUR/USD Technical

• EUR/US was flat in the Asian session and has posted losses in European trade
• 1.1278 is providing support
• 1.1376 remains fluid and is currently a weak resistance line. It could see further action in the Thursday session

Further levels in both directions:

• Below: 1.1278, 1.1054 and 1.0909
• Above: 1.1376, 1.1495 and 1.1638
• Current range: 1.1278 to 1.1376

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement on Thursday. Short positions have a majority (61%), indicative of trader bias towards EUR/USD reversing directions and climbing to higher ground.

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.