EUR/USD – Euro shrugs off soft CPI Estimate, U.S nonfarm payrolls next

By Kenny Fisher, Currency Analyst at Market Pulse

EUR/USD has posted small gains in the Friday session. With key events still to come on both sides of the pond, traders should be prepared for stronger movement from the pair. Currently, the pair is trading at 1.1402, up 0.06%. On the release front, Friday is packed with events. German and eurozone services PMIs disappointed, as both slipped in December and missed their estimates. CPI Flash Estimate fell to 1.6%, down from 2.0% in the previous release. This was shy of the estimate of 1.8%.

In the U.S., the markets are expecting gains from both wage growth and nonfarm payrolls. On Thursday, ADP nonfarm payrolls surged to 271 thousand, crushing the estimate of 179 thousand. Will the official nonfarm payrolls follow through with a stellar reading?

The markets will be paying close attention to remarks on Friday from Fed Chair Jerome Powell, who will participate in a panel discussion in Atlanta. The Fed faced criticism for its overly hawkish rate statement at the December meeting, when the Fed raised rates for the fourth time in 2018. The statement unnerved investors and contributed to sharp losses in the equity markets. Powell may use this opportunity to reassure investors by sending a dovish message. The Fed is currently forecasting two rate hikes next year, but many analysts are concerned that continuing to tighten policy when there are signs of an economic slowdown could be a serious mistake.

It was an abbreviated holiday week, but that didn’t prevent the euro from plunging on Wednesday, when the currency fell over 1%. The catalyst for the slide was a stunning announcement from Apple, which cut its sales forecast for this quarter, blaming a drop in sales of iPhones in China. This was more negative fodder for investors, who are increasingly worried about the economic toll of the ongoing U.S-China trade war, which is has already caused a slowdown in China. The Apple announcement panicked investors, sending the safe-haven yen sharply higher, and the fallout pushed the euro and other currencies sharply lower. However, the euro has since recovered some of these losses.

Friday (January 4)

  • 2:45 French Preliminary CPI. Estimate 0.1%. Actual 0.0%
  • 3:15 Spanish Services PMI. Estimate 53.8. Actual 54.0
  • 3:45 Italian Services PMI. Estimate 50.2. Actual 50.5
  • 3:50 French Final Services PMI. Estimate 49.7. Actual 49.0
  • 3:55 German Final Services PMI. Estimate 52.5. Actual 51.8
  • 3:55 German Unemployment Change. Estimate -12K. Actual -14K
  • 4:00 Eurozone Final Services PMI. Estimate 51.4. Actual 51.2
  • 5:00 Eurozone CPI Flash Estimate. Estimate 1.8%. Actual 1.6%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%. Actual 1.0%
  • 5:00 Eurozone PPI. Estimate -0.2%. Actual -0.3%
  • 5:00 Italian Preliminary CPI. Estimate 0.1%. Actual -0.1%
  • 8:30 US Average Hourly Earnings. Estimate 0.3%
  • 8:30 US Nonfarm Employment Change. Estimate 179K
  • 8:30 US Unemployment Rate. Estimate 3.7%
  • 9:45 US Final Services PMI. Estimate 53.5
  • 10:15 US Fed Chair Powell Speaks
  • 11:00 US Crude Oil Inventories. Estimate -2.8M

*All release times are EST

*Key events are in bold

EUR/USD for Friday, January 4, 2019

EUR/USD for January 4 at 4:45 EST

Open: 1.1395 High: 1.1417 Low: 1.1383 Close: 1.1402

EUR/USD Technical

S1S2S1R1R2R3
1.11201.12121.13001.14341.15531.1685

EUR/USD showed little movement in the Asian session. The pair posted small gains in European trade but has retracted

  • 1.1300 is providing support
  • 1.1434 is the next resistance line. It could be tested in the Friday session
  • Current range: 1.1300 to 1.1434

Further levels in both directions:

  • Below: 1.1300, 1.1212 and 1.1120e
  • Above: 1.1434, 1.1553, 1.1685 and 1.1803
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