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Mon, May 09 2016, 06:00 GMT SzrnFX
The EUR/USD is seen consolidating the downside as dust settles over the NFP aftermath, with the major catching fresh bid tone in recent dealings amid broad based US dollar retreat.
The greenback wiped-out gains against its major competitors and now trades muted, underpinning the recovery in EUR/USD. Moreover, mixed market sentiment amid higher oil prices and subdued Asian equities also lifts the safe-haven bids for the EUR.
Last week, the dollar edged higher against a basket of its major peers on Friday as remarks by a Federal Reserve official indicated that U.S. interest rates could still rise sooner than expected, despite a weaker than forecast employment report.
Focus Today Economic Data..
The German factory orders data amid a data-dry trading calendar today. Besides the Euro group meetings will be closely watched for any news on EU referendum ahead of the US LMCI release.
Fri, May 06 2016, 06:04 GMT SzrnFX
The EUR/USD is seen consolidating the downside and now strives hard to build onto gains above 1.14 handle, the currency pair traded between 1.1386 and 1.1494, with the sharp losses, the euro dipped below 1.14 against the dollar for the first time this month. EUR/USD has followed a six-day winning streak from last week with a modest losing skid over the last three sessions. Over the last month, the euro is virtually flat against its American counterpart – up 0.11% during that span.
The EUR/USD pair finds support from negative sentiment seen on the Asian equities as tumbling oil prices weighed down on the resource and energy sector stocks. Moreover, adding to the risk-off market profile, a typical cautious scenario before the US jobs data also underpins the safe-haven bids for the euro.
Overnight, the dollar rose against a basket of currencies for a third day on Thursday as traders closed out profitable bets against the greenback before Friday’s U.S. payrolls report which may confirm the view the Federal Reserve will not raise interest rates soon.
All eyes remain on the main risk event for this week, the US payrolls data due later in the NA session. Markets are expecting a robust 200,000 increase in payrolls coupled with a respectable 0.3% gain in hourly wages. The US employment report will help the Fed on its next Fed rate hike decision.
The EUR/USD pair has given away some pips and returned to the current 1.1470/65 band, as USD continues to grind lower.
At the weekend, the China April CFLP manuacturing index came in at 50.1, below expectations, but hanging onto expansion territory. The CFLP service PMI eased to 53.5 from 53.8. The semi-official manufacturing PMI from the China Federation of Logistics and Purchasing and National Bureau of Statistics slid from the first over-50 reading in eight months in March.
The greenback has broken below the key support at the 93.00 handle, levels last seen in August 2015.
Focus Euro Data.
The final April’s manufacturing PMIs are due followed by speeches by ECB’s M.Draghi and BuBa’s J.Weidmann. Across the pond, Fed’s Lockhart and Williams are due to speak, while the ISM Manufacturing and Markit’s PMI will take centre stage on the data front.
The EUR/USD pair manages to hold the upside and now extends gains beyond 1.13 handle on the back of renewed USD selling across the board, triggered by BOJ-led sell-off in the USD/JPY pair.
The BOJ kept policy steady at its policy review meeting today, largely disappointing markets, who had bet for more easing this Thursday. USD/JPY slumped over 2%, dragging the greenback lower against its major peers. At the timing of writing, the USD index drops -0.36% to 94.05 levels.
The FOMC said it will assess economic conditions, measures of labor market conditions, indications of inflationary pressures and expectations, as well as readings on financial and international developments as it determines the size of future adjustments to the Federal Funds Rate. Since the FOMC last met in March, the central bank noted that economic activity has slowed in recent weeks. In addition, the FOMC said while the housing sector has shown improvement since the start of the year, business fixed investment and net exports remain soft.
The major finds support near 1.13 handle and keeps the upside bias intact against a backdrop of the latest dovish FOMC statement, which failed to provide clear hints on the next Fed rate hike this year. With the central banks’ events now behind, focus once again turns to fundamentals from both continents. The German prelim CPI, employment data as well as the US advance GDP report will be closely eyed in the day ahead.
The EUR/USD currency pair is struggling hard to keep the bids, but in vain, as the US dollar is gradually picking-up pace against its major peers, as focus shifts towards the Fed monetary policy decision due later in the NY session.
The downside remains restricted on the back of a cautious tone persisting across the financial markets, as traders remain wary and refrain from placing directional bets on the major ahead of the FOMC statement, which is likely to spur volatility into markets and could trigger extreme USD price action.
Investors continue to await Wednesday’s interest rate decision by the Federal Open Market Committee (FOMC), its third monetary policy statement release since their historic rate hike in December. The Fed has responded by holding its benchmark Federal Funds Rate at its current level between 0.25 and 0.50% in each of its first two meetings this year. Last month, the FOMC voted 9-1 to leave the Fed Funds Rate unchanged, with Kansas City Fed president Esther George serving as the lone dissenter.
Focus FOMC ….
The Fed is widely expected to keep interest rates on hold but markets will be closely eyeing the statement for hints of when the committee will announce its second rate hike since the first hike in December.
The EUR/USD Spot has managed to come back from overnight troughs near 1.1220 – the lowest level in the last three weeks – and it now seems to be stabilizing in the mid-1.1200s, posting daily tops so far and recovering some ground after last week’s sell-off.
Focus IFO Data.
The German IFO indicator is next on tap, with market consensus expecting a generalized albeit slight improvement during the current month. Moving forward, a very interesting calendar will put the greenback in centre stage, with the FOMC meeting being the salient event on Wednesday.
EUR/USD spot has returned to the 1.1300/1.1290 area and is wobbling between gains and losses after yesterday’s significant reversal from the boundaries of 1.1400 the figure.
A better tone in crude oil prices has sparked another bout of risk-on trade, while the greenback remains bid for the time being, all weighing on the pair ahead of the ECB meeting due later.