EUR/USD – Steady as Markets Eye Non-Farm Payrolls

EUR/USD has edged lower in Friday trading, as the pair trades just below the 1.36 line in what has been an uneventful week. In the Eurozone, French Industrial Production surprised with a strong of 1.3%, reversing directions after two straight declines. However, Eurozone Final GDP did not impress, with a paltry gain of 0.1%. In the US, today’s highlight is the Non-Farm Employment Change. On Thursday, the ECB maintained interest rates at 0.25%. US Unemployment Claims posted another strong reading and beat the estimate.

US Non-Farm Payrolls, one of the most important economic indicators, will be released later on Friday, and we could see some markets movement as a result. There had been concern that the indicator might sag towards the end of the year, but NFPs have looked strong. The past two readings have above the 200 thousand level and well above expectations. The markets are expecting another strong release, with the estimate standing at 196 thousand.    

The first ECB rate announcement of 2014 was a non-event, as the central bank held the benchmark rate at a record low of 0.25%, as expected. Mario Draghi’s follow-up press conference did not make waves and move the currency markets, as has often been the case in the past. Draghi said that monetary policy will remain accommodative for as long as is needed to help the Eurozone economy recover, and that interest rates will likely remain at present or lower levels for the foreseeable future. If growth and inflation indicators continue to look weak, the ECB may have to take action at its next meeting in February. The euro shrugged off the ECB announcement and remained close to the 1.36 line.

It’s been an excellent start for US employment numbers in the new year. ADP Non-Farm Payrolls looked very sharp, as the key indicator climbed to 238 thousand, up from 215 thousand a month ago. This easily surpassed the estimate of 199 thousand. This was followed by another strong Unemployment Claims, which dipped to 330 thousand, beating the forecast. With another QE taper in January a strong possibility, every employment release will be under the market microscope and could impact on the currency markets.

EUR/USD for Friday, January 10, 2014

EUR/USD January 10 at 10:45 GMT

EUR/USD 1.3593 H: 1.3620 L: 1.3589

EUR/USD Technical

• EUR/USD is showing little movement in Friday trading. The pair has edged lower in the European session, dropping below the 1.36 line.
• 1.3585 remains under strong pressure and could break during the day. This is followed by a stronger support line at the round number of 1.3500.
• The pair faces strong resistance at 1.3649. This is followed by resistance at 1.3786.
• Current range: 1.3585 to 1.3649

Further levels in both directions:

• Below: 1.3585, 1.3500, 1.3410 and 1.336
• Above: 1.3649, 1.3786, 1.3893, 1.4000 and 1.4140

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to gains in short positions in Friday trading. This is consistent with what we are seeing from the pair, as the euro has edged lower against the dollar. The ratio is made up largely of short positions, indicative of a trader bias towards the dollar continuing to move to higher ground.

The euro continues to trade quietly, hugging the 1.36 line. Traders should  be prepared for some strong movement in the North American session if Unemployment Claims is not in line with expectations.

EUR/USD Fundamentals

• 7:45 French Industrial Production. Estimate 0.6%. Actual 1.3%.
• 10:00 Eurozone Final GDP. Estimate 0.3%. Actual 0.1%.
• 13:30 US Non-Farm Employment Change. Estimate 196K.
• 13:30 US Unemployment Rate. Estimate 7.0%.
• 15:30 US Average Hourly Earnings. Estimate 0.2%.
• 15:00 US IBD/TIPP Economic Optimism. Estimate 45.3 points.
• 15:00 US Wholesale Inventories. Estimate 0.4%.

*Key releases are highlighted in bold

*All release times are GMT

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