EUR/USD – Euro Climbs Higher, Markets Eye US Employment Report

After an uneventful start to the week, the euro has climbed higher on Wednesday. Currently, EUR/USD is trading at 1.1160. In economic news, French Industrial Production posted a gain of 0.3%, beating expectations. In the US, today’s highlight is JOLTS Job Openings. This important employment indicator is expected to edge higher to 5.52 million. On Thursday, the US will release Unemployment Claims.

The manufacturing sector in the Eurozone has been hit hard by weak global demand, and the economic instability caused by Britain’s decision to leave the EU could take a further toll, as construction projects may be put on hold during this period of great uncertainty. This week’s manufacturing numbers have looked good, and the trend continued with French Industrial Production. The indicator gained 0.3%, easily beating the forecast of -0.8%. Earlier in the week, German Industrial Production posted a gain of 0.8% in June, rebounding after a sharp decline of 1.3% in the previous release. This figure was just shy of the forecast of 0.9%. At the same, time, German June Factory Orders declined 0.4% and the indicator has failed to post a gain in three months. This points to a deterioration in the manufacturing base of the largest economy in the Eurozone.

US July employment numbers looked strong, led by a banner Nonfarm Payrolls report. The July indicator surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 thousand. This release follows the outstanding June reading of 280 thousand. US wage growth has been a soft spot in the robust labor market, but there was positive news as Average Hourly Earnings gained 0.3%, edging above the forecast of 0.2%. As well, Unemployment Claims remained steady at 4.9%. What will the Federal Reserve do with these numbers? Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. The Fed has made no secret of the fact that any rate move will be data-dependent, and the stellar job numbers will force to Fed to give serious thought to a move in September. Employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or waits until December before revisiting the rate question.

EUR/USD Fundamentals

Wednesday (August 10)

• 6:45 French Industrial Production. Estimate +0.3%. Actual -0.8%
• Tentative – German 10-year Bond Auction
• 14:00 US JOLTS Job Openings. Estimate 5.52M
• 14:30 US Crude Oil Inventories. Estimate -1.3M
• 17:01 US 10-year Bond Auction
• 18:00 US Federal Budget Balance. Estimate -119.0B

Thursday (August 11)

• 8:30 US Unemployment Claims. Estimate 272K

* Key releases are in bold

*All release times are GMT

EUR/USD for Wednesday, August 10, 2016

EUR/USD August 10 at 9:15 GMT

Open: 1.1117 High: 1.1166 Low: 1.1117 Close: 1.1165

EUR/USD Technical

• EUR/USD has posted gains in the Asian and European sessions
•  1.1278 is a strong resistance line
•  1.1150 has switched to support following gains by EUR/USD. It is a weak line and could break during the Wednesday session

Further levels in both directions:

• Below: 1.1150, 1.1054, 1.0925 and 1.0821
• Above: 1.1278, 1.1376 and 1.1467
• Current range: 1.1150 to 1.1278

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged on Wednesday, consistent with the lack of significant movement from the pair. Short positions have a strong majority (58%), indicative of trader bias towards EUR/USD breaking out and moving to lower levels.

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.