EURUSD: adjusting for September`s cut
The FOMC meeting was held during the previous week, where the Fed kept interest rates unchanged for the ninth consecutive meeting. However, Fed Chair Powell signaled that the Fed is “nearing” to the rate cut. His statement increased market expectations that the first rate cut in this cycle might occur in September. Some quite important indicators were posted during the week. Friday`s jobs data brought surprise to markets, when the Non-farm payrolls significantly dropped in July to the level of 114K, while the market was expecting to see a figure of around 175K. At the same time, the US unemployment rate reached the level of 4.3%, also significantly higher from 4.1% forecasted by the market. Average hourly earnings were increased by 0.2% in July on a monthly basis and 3.6% compared to the previous years, and were below market estimate by 0.1% both. As for other data published for the US, the CB Consumer Confidence reached 100,3 in July, higher from 99,7 forecasted by the market. The ISM Manufacturing PMI reached 46,8 in July, a bit lower from 48,8 expected by the market.
The GDP growth rate for Q2 in Germany is minus 0.1% on a yearly basis, the same as on a quarterly level. At the same time, GDP growth rate for the Euro Zone for Q2 stands at 0.3% for the quarter and 0.6% on a yearly basis, both above market estimates by 0.1%. The inflation is modestly picking up in Germany, reaching 2.3% in July for the year and 0.3% for the month, again by 0.1% higher from the market estimate. Inflation rate in the Euro Zone reached 2.9% in July on a yearly basis, while it stayed at 0% on a monthly basis. Unemployment rate in Germany remained flat at 6% in July.
The currency pair started the week with a move from the levels around 1.086 toward the lowest weekly level at 1.0778. However, Friday`s surprising jobs data pushed the US Dollar strongly to the down side, so the currency pair finished the week at 1.0908. The highest weekly levels reached on Friday was 1.0927. The RSI reacted to such a strong Friday`s move, ending the week at the level of 59. This move indicates that the market will slow down a path toward the oversold market side. Moving averages of 50 and 200 days continue with a modest divergence from each other, still not indicating a potential for a cross in the coming period.
As it has been noted in a post for the week before, higher market nervousness around the FOMC meeting was highly expected. However, it was clearly reflected after the posted jobs data on Friday. The market is now almost certain that the rate cut is coming in September, and they are adjusting their positions accordingly. In this sense, some further adjustments might be possible during the first half of the week ahead. It should be noted that there is no significant data scheduled to be posted during the week ahead, in which sense, some stronger moves should not be expected. As per current charts, there is some probability that the currency pair might test higher grounds from current 1.09, but no higher than 1.095. Some retracement is also highly possible, still, not below the level of 1.085, as per current charts.
Important news to watch during the week ahead are:
Euro: Inflation rate final for July for Germany
USD: ISM Services PMI for July
The GDP growth rate for Q2 in Germany is minus 0.1% on a yearly basis, the same as on a quarterly level. At the same time, GDP growth rate for the Euro Zone for Q2 stands at 0.3% for the quarter and 0.6% on a yearly basis, both above market estimates by 0.1%. The inflation is modestly picking up in Germany, reaching 2.3% in July for the year and 0.3% for the month, again by 0.1% higher from the market estimate. Inflation rate in the Euro Zone reached 2.9% in July on a yearly basis, while it stayed at 0% on a monthly basis. Unemployment rate in Germany remained flat at 6% in July.
The currency pair started the week with a move from the levels around 1.086 toward the lowest weekly level at 1.0778. However, Friday`s surprising jobs data pushed the US Dollar strongly to the down side, so the currency pair finished the week at 1.0908. The highest weekly levels reached on Friday was 1.0927. The RSI reacted to such a strong Friday`s move, ending the week at the level of 59. This move indicates that the market will slow down a path toward the oversold market side. Moving averages of 50 and 200 days continue with a modest divergence from each other, still not indicating a potential for a cross in the coming period.
As it has been noted in a post for the week before, higher market nervousness around the FOMC meeting was highly expected. However, it was clearly reflected after the posted jobs data on Friday. The market is now almost certain that the rate cut is coming in September, and they are adjusting their positions accordingly. In this sense, some further adjustments might be possible during the first half of the week ahead. It should be noted that there is no significant data scheduled to be posted during the week ahead, in which sense, some stronger moves should not be expected. As per current charts, there is some probability that the currency pair might test higher grounds from current 1.09, but no higher than 1.095. Some retracement is also highly possible, still, not below the level of 1.085, as per current charts.
Important news to watch during the week ahead are:
Euro: Inflation rate final for July for Germany
USD: ISM Services PMI for July
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