- Bullish share returns back to 51% in the SWFX market
- Commands to buy the Euro climbed from 40% to 52% in the past 24 hours
- Resistance at 1.1022/60 remains in focus, bears keep targeting May/July lows at 1.0819/08
- Daily and weekly technical indicators are neutral on Friday
- Economic events to watch in the next 72 hours: Spanish GDP (Q3); Italian CPI (Oct) and Unemployment (Sep); Euro zone CPI (Sep) and Unemployment (Sep); US Personal Spending and Personal Income (Sep), Chicago PMI (Oct); FOMC Member Williams Speaks
The number of unemployed in Europe's number one economy decreased more-than-expected in the tenth month of the year, while the unemployment rate remained flat. According to the Federal Labor Agency, the number of people out work declined a seasonally adjusted 5,000 to reach 2.788 million. Analysts were expecting a drop of 4,000. The unemployment rate stayed unchanged at 6.4%, the lowest level in 25 years. Data from a separate report published by the statistical office Destatis revealed that the number of jobless Germans fell by 7,000 or 0.5% in the prior month to 1.82 million in total. The ILO unemployment rate remained steady at 4.5%. With regards to the German consumer price index that measures the country's cost of living, it rose by 0.3% on an annual basis in October, outdoing the expected increase of 0.2% from September's 0.0%. The harmonized consumer price index for Germany advanced 0.2%. The Spanish consumer prices, on the other hand, demonstrated a decline for the third month in a row in October. The country's CPI tumbled 0.7% year-on-year, surpassing analysts' forecasts of a 0.6% decrease. The HICP dipped 0.9% on year in October, slower than the 1.1% fall in the preceding month. The figure was also in line with economists' expectations.
Separately, the US economy slowed sharply in the third quarter of 2015, reflecting a cutback in businesses' stockpiling of goods, while underlying demand remained healthy in the world's biggest economy. According to the Department of Commerce, the advanced estimate of third quarter GDP rose at an annualized rate of 1.5%, slightly missing a 1.6% growth forecast. The July through September reading marks a sharp deceleration from the second quarter, when the economy expanded at a 3.9% rate. Nevertheless, economists claim that the inventory drag, which was the main reason for steep decline in the pace of economic growth in the third quarter, is likely to be temporary. Therefore, the US GDP growth is expected to pick up in the fourth quarter given strong domestic fundamentals. Meanwhile, weekly layoffs data from the US are showing no sign of slowdown in labour market trends, as a measure of jobless claims fell to its lowest level since 1973. As the Department of Labour revealed, initial claims for state unemployment benefits advanced 1,000 to a seasonally adjusted 260,000 for the week ended October 24. The recent economic data from the US confirms the Fed's words that domestic economy is expanding at a "moderate pace", while the possible December's rate hike is still on the table.
Upcoming fundamentals: Spain's economy to grow; Euro zone prices to exit deflation
Spanish gross domestic product data is first up today at 8:00 GMT. Markets estimate the fourth largest Euro area's economy to surge by 0.9% in the third quarter of this year, down slightly from a 1% advance in the preceding three-month period. Nonetheless, the pace of economic recovery is likely to remain robust on the back of strong tourist season and government's supportive policy. Alongside, the Euro zone Flash CPI Estimate for October and jobless rate for September are due at 10:00 GMT. Headline inflation is projected to rebound from -0.1% in September to zero this month, while unemployment rate is estimated to hold steady at 11%.
EUR/USD to remain under bearish pressure
After penetrating the seven-month downtrend line, the EUR/USD currency pair is going to remain under bearish pressure, even though it showed some gains yesterday. A revival failed to send the cross above 1.10, where it should have met the monthly S1 at 1.1022 and the downtrend itself around 1.1060. Therefore, any further rallies are expected to remain tepid and unsustainable. In addition, a close below the 1.0870 support level (monthly S2/weekly S1) and next demand at 1.0819/08 is necessary, in order to confirm negative trend of EUR/USD. Weekly and daily indicators keep mixed views on the matter.Daily chart
Another qualitative channel down pattern has emerged in the one-hour chart. The pattern implies an advance in the direction of 1.1020 today, precisely where the monthly S1 is located at the moment. There a sell-off is forecasted to resume, potentially down to the lower support at 1.0840.
Hourly chart
SWFX portion of bulls is back to 51%; pending orders jump above 50%
However, the majority (58%) of SAXO Bank clients still expect EUR/USD to lose value, up three percentage points from yesterday. Moreover, OANDA sentiment has deteriorated noticeably during the trading session on Thursday as bears regained the majority of open positions (50.54%).
Spreads (avg,pip) / Trading volume / Volatility
Community members forecast the Euro to grow against the US Dollar this week
Comparing to the previous week, participants of the last week's quiz stayed mostly unchanged on their view about pair's future perspectives, as now 56% of them are staying bullish on the currency pair. The vast majority of traders expect the pair to outperform the current trading levels.
According to Likerty who supports the bullish move "The US Dollar is showing intentions for a prolonged (up to few months) cycle of weakness, recent EUR/USD bearishness will trap many sellers on the way up. This week should be crucial, while clues should come from Yen and Gold."