EURUSD, Daily
EURUSD price continues to lack direction within the daily chart and it is beginning to appear that a trading range may be forming between the 1.1460 and 1.1090 levels over the short term. This period of lackluster price action should remain as the market waits for the U.S. jobs data due out on Friday. Traders should look towards commodity prices for any signs of a bottoming which may contradict data that still points to slower global growth. The likelihood of a stronger USD and weaker EUR should remain as the main trend into the year end as fallout from the European automotive industry and the likelihood of further ECM QE increases.
Today’s mixed European PMI readings will give ECB policy makers something to argue about at the next council meeting, especially as downside risks are picking up in light of developments in the global economy and the fallout from the emission scandal for European automakers. The current mixed readings are clearly showing up in the EUR as price has yet to choose a direction with trader’s undecided on which side of the trade to take.
The global stock market rebound is still continuing for now, despite a dip in Japan’s Tankan index, and stabilization in China’s manufacturing PMI at contraction levels. The USD has been trading firmer against the EUR and GBP over the last 5 trading days on the back of a strong Wall Street close and follow-up gain in Asian stock markets. The AUD and CAD, meanwhile, rallied to one-week highs versus the USD, while the NZD hit a two-week peak.
Currency Pairs, Grouped Performance (% change)
The EUR is mostly weaker against the majors as the Eurozone manufacturing PMI suggests a slight slowdown in overall growth dynamics, but a more balanced picture across the Eurozone.
The GBP is trading mixed after the UK manufacturing PMI came in fractionally above market forecast.
The CHF is sharply lower in the wake of an unexpected dip in the Swiss SVME manufacturing PMI.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today
• GBP Manufacturing PMI: The UK manufacturing PMI is fractionally above forecast at 51.5 in September data. The survey this month indicates stabilization in the sector at moderate expansion, holding just above the two-year low point at 51.4, which was seen in June. Sterling has traded modestly higher in the wake of the data.
• USD Initial Jobless Claims: U.S. initial jobless claims are expected to be 270k (median 270k) in the week-ended September 26. Continuing claims are expected to fall to 2,213k for the week-ended September 19. Forecast risk: downward, as volatility concerns could give businesses pause.
• USD Manufacturing ISM: The September ISM is expected to rise to 52.0 from 51.1 in August. Forecast risk: upward, given strong component data in the early month reports. Market risk: downward, as weakening in data could impact rate hike timelines.
