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EUR/USD Into NFP & Yellen's Speech: Range & Outlook
EUR/USD – BEARISH BIAS – (1.1000-1.1400)
The ECB monetary policy press conference has just ended and President Draghi was cautious over the outlook for economic growth. The inflation forecast for 2016 was raised by 0.1ppt to 0.2% and the real GDP growth rate was raised 0.2ppt to 1.6% but the inflation projection by 2018 was still short of target at 1.6%, the same estimate as in March while the 2018 real GDP growth projection was revised down 0.1ppt to 1.7%. So in answering a question about the need to do more to reach the inflation target, President Draghi did not dismiss the idea but stated that the ECB wished to see the impact of the latest easing starting on 8th June. We have long argued that the ECB would never suddenly halt an EUR 80bn per month QE program as scheduled in one go next March and today’s comment suggests some form of tapering will be announced, perhaps through the remainder of 2017.
As has been the case of late, EUR/USD direction in the week ahead will be more determined by US developments – hence tomorrow’s jobs report and then the speech by Chair Yellen next Monday.
Yields spreads suggest downside risks from here.
source
Markets 101: What economic data moves markets the most?
Business & Finance
August 4, 2009
By: Jennifer Shotts
Several government agencies track these important data releases each month that give market participants a clue as to the economic health of the country. Some data points will be more heavily weighted depending on the state of the economy at the time of its release, and may create more market volatility if the expectations of the release are not met. Here are the top market moving data releases:
1. Non Farm Payrolls. Released every first Friday of the month by the Bureau of Labor Statistics, the Non-Farm Payrolls release includes the change in number of employed people during the previous month excluding the farming industry, the unemployment rate, and the average of hourly earnings. This lagging indicator is highly regarded as an important signal for overall economic health since consumer spending is highly correlated with labor conditions.
2. GDP. Gross domestic product is the broadest measure of economic activity and the primary gauge of a nation's economic health. It measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. GDP is reported in three ways: advance, preliminary, and final. Since the Advance GDP is released first, it tends to have the most impact on the markets. It is released by the Bureau of Economic Analysis.
3. Fed funds rate/FOMC statement. Released by the Federal Reserve eight times per year, it is the interest rate at which banks lend balances held at the Fed Reserve to other banks overnight, and the paramount factor in currency valuation. Often the rate decision is priced into the market so it tends to be overshadowed by the accompanying FOMC statement which focuses on the future.
4. Retail sales. This is the broadest and earliest look at vital consumer spending data, which accounts for a majority of overall economic activity. The Census Bureau releases this monthly.
5. CPI/PPI. Consumer price index and the producer price index are considered leading indicators of consumer inflation. Both are released by the Department of Labor.
6. ISM non manufacturing/ISM manufacturing. These indexes are leading indicators of the health of the economy too, measuring a survey of 400 businesses each month, a value above 50 indicates industry expansion, below 50 indicates contraction. Released by the Institute for Supply Management.
7. Pending home sales/new home sales/existing home sales. The National Association of Realtors release the data about the U.S. housing market each month. Both new homes sales and existing homes sales can be leading indicators about economic health because a sale triggers a wide-reaching ripple effect.
8. Trade Balance. The Bureau of Economic Analysis releases this data, the difference in value between exported goods and imported goods. A positive number indicates that more goods and services were exported than imported.
9. Long term purchases (TIC). This data released by the Department of the Treasury each month represents the balance of domestic and foreign investment. Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation's securities, thus it can be a market mover in the US dollar, for example.
Euro and GBP interest rate decisions are missing off the list and should possibly be in at around No4
EUR/USD extends correction above 1.1150, NFP in focus
The EUR/USD pair extends its recovering mode into early Europe, reversing a part of ECB-led slide witnessed yesterday, while the main risk event for today remains the US employment data due later in the NY session.
EUR/USD tests hourly 200-SMA at 1.1159
Currently, EUR/USD trades modestly flat at 1.1155, extending recovery from 1.1142, session lows. The main currency pair attempts a tepid-bounce this Friday as dust settles over the ECB aftermath, while markets resort to cover their EUR shorts as we head towards the highly influential US NFP data, which is likely to trigger massive volatility across the financial markets.
On Thursday, the European Central Bank (ECB) left monetary policy unchanged as the main refinancing rate stayed at 0.0%, while the deposit rate was kept at -0.4%. While the ECB Chief noted during his presser, consumer price growth would remain low or negative for several months ahead. Draghi’s comments were the main catalysts behind the sell-off in EUR/USD from above 1.12 handle.
Data-wise, the EUR calendar holds a series of services PMI reports from the Euro area, followed by Eurozone retail sales. While the US jobs report is expected to emerge the main market moving event this Friday.
EUR/USD Technical Levels
In terms of technicals, the pair finds the immediate resistance 1.1210 (20 & 100-DMA). A break beyond the last, doors will open for a test of 1.1250 (round number) On the flip side, the immediate support is placed at 1.1126/24 (May 25 Low/ Daily S1) below which at 1.1099 (200-DMA) could be tested.
EUR/USD extends correction above 1.1150, NFP in focus
The EUR/USD pair extends its recovering mode into early Europe, reversing a part of ECB-led slide witnessed yesterday, while the main risk event for today remains the US employment data due later in the NY session.
EUR/USD tests hourly 200-SMA at 1.1159
Currently, EUR/USD trades modestly flat at 1.1155, extending recovery from 1.1142, session lows. The main currency pair attempts a tepid-bounce this Friday as dust settles over the ECB aftermath, while markets resort to cover their EUR shorts as we head towards the highly influential US NFP data, which is likely to trigger massive volatility across the financial markets.
On Thursday, the European Central Bank (ECB) left monetary policy unchanged as the main refinancing rate stayed at 0.0%, while the deposit rate was kept at -0.4%. While the ECB Chief noted during his presser, consumer price growth would remain low or negative for several months ahead. Draghi’s comments were the main catalysts behind the sell-off in EUR/USD from above 1.12 handle.
Data-wise, the EUR calendar holds a series of services PMI reports from the Euro area, followed by Eurozone retail sales. While the US jobs report is expected to emerge the main market moving event this Friday.
EUR/USD Technical Levels
In terms of technicals, the pair finds the immediate resistance 1.1210 (20 & 100-DMA). A break beyond the last, doors will open for a test of 1.1250 (round number) On the flip side, the immediate support is placed at 1.1126/24 (May 25 Low/ Daily S1) below which at 1.1099 (200-DMA) could be tested.
Yesterday EURUSD initially rose but found enough selling pressure after Draghi speech to turn south, giving all it gains back to the market and closed near the low of the day, however managed to close within the previous day range, which suggests being slightly on the bearish side of neutral.
The pair is trading below the 50-day moving average that are acting as dynamic resistance although it is trading above the 10 and 200-day moving average both are acting as a dynamic support.
The key levels to watch are: The 50-day moving average at 13.04 (resistance), a daily resistance at 1.1237, the 10-day moving average at 1.1153 (support), a daily support at 1.1097 and the 200-day moving average at 1.1068 (Support).
EUR/USD weekly outlook: June 6 - 10
Monday, June 6
Germany is to publish data on factory orders.
Fed Chair Janet Yellen is to speak at an event in Philadelphia.
Tuesday, June 7
The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The Swiss National Bank is to publish data on foreign currency reserves.
Wednesday, June 8
Japan is to release data on the current account as well as revised data on first quarter growth.
China is to produce data on the trade balance.
The U.K. is to release data on manufacturing and industrial production.
Canada is to report on building permits.
Thursday, June 9
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish a policy statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.
Markets in China are to be closed for a holiday.
China is to publish inflation data.
ECB President Mario Draghi is to speak at an event in Brussels.
The U.K. is to release data on the trade balance.
The U.S. is to publish the weekly report on jobless claims.
Friday, June 10
Markets in China are to be closed for a holiday.
Canada is to publish the monthly employment report.
The U.S. is to round up the week with data on consumer sentiment.