- SWFX market sentiment is 62% bearish
- Trader set up pending orders are 57% short
- Pair opened Friday's session at the 1.1279 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: US GDP Annualized (Q2); US PCE Annualized (Q2); US International Trade in Goods (July); Fed's Yellen Speaks; UoM Confidence Final (August);
Business confidence in the Euro zone's largest economy, Germany, dropped unexpectedly in August amid uncertainty caused by Britain's decision to leave the European Union, official data showed on Thursday. The Ifo Business Climate Index, a closely-followed early indicator of economic developments in the country, fell to 106.2 points in August, compared to the preceding month's 108.3 points, whereas market analysts anticipated a slight acceleration to 108.5 during the reported month. That was the lowest reading since February and the biggest monthly drop since Spring 2012. Analysts say that the economy only begins to show signs of post-Brexit pressure. Furthermore, the sub-index measuring current business conditions slipped to 112.8 in August, following July's 114.7 points, while experts' expectations of economic development within the next six months declined to 100.1 from July's 102.2 points. The Munich-based Ifo institute said business confidence deteriorated in all sectors except construction and services. The survey is based on responses from around 7,000 firms in manufacturing, construction, wholesaling and retailing. Despite disappointing results from Germany's Ifo business climate survey, the Euro traded slightly higher against the British Pound and the US Dollar after the data was released.
New orders for US manufactured capital goods climbed in July for a second month, fresh figures revealed on Thursday. According to the Department of Commerce, demand for all durable goods rose 4.4% in the reported month, the highest reading since October 2015. Market analysts expected US orders for long-lasting goods to increase 3.4% in July, following last month's 3.9% upwardly revised drop. Excluding transport, orders jumped 1.5% in the same month, compared to June's 0.4% upwardly revised decline and surpassing the 0.4% market forecast. The gain in overall durable goods orders was mainly driven by a 10.5% rise in demand transportation equipment. Orders for civilian aircraft, which are extremely volatile month to month, advanced 89.9% in July, while orders for automobiles remained flat. Meanwhile, the rise in core durable goods orders follows an increase in oil and gas drilling activity. Other data released on Thursday showed the number of Americans filing for unemployment benefits dropped to 261,000 in the week ending August 20, following last week's 262,000 claims. Economic desks penciled in a slight acceleration to 265,000 in the reported period. This marks 77 consecutive weeks of initial claims below 300,000, the longest streak since 1973. The four-week moving average fell to 264,000 from 265,250 seen in the previous seven days.
Upcoming fundamentals: US data and Jackson Hole Symposium second day
Friday is a busy day for traders, as some EU data has already been released, a lot of US data will be published and it is the second day of the symposium in Jackson Hole, Wyoming. Traders have to look out for a combined US data release at 12:30 GMT, when the US GDP and PCE will be published for the second quarter of 2016 and the US International Trade in Goods for July will be out. Afterwards at 14:00 GMT the Fed's chairwoman Janet Yellen will give a speech at the Jackson Hole Symposium. In the meantime, the UoM Confidence Final index will be out for August.
EUR/USD breaks resistance at 1.1281 on Friday
Daily chart: The common European currency started Friday's trading session just below the weekly pivot point at 1.1281. However, without any fluctuations to the downside, the currency exchange rate broke the resistance provided by the pivot point. The currency pair had broken the resistance also on Thursday. At the moment, the pair faces no resistance up to the level of 1.1353, where the second monthly resistance is located at. Moreover, aggregate technical indicators forecast a surge for the day. These facts combined assure that the rate is going up.Daily chart
Hourly chart: The EUR/USD pair's hourly chart shows that the currency exchange rate's movements were dictated by the simple moving averages and not the weekly pivot point at 1.1281. The rate began Thursday surging to the 55-hour SMA at 1.1294 by 10:00 GMT. There it changed direction and hit the 200-hour SMA at 1.1284 just below not two hours later. As the two SMAs closed in on one another, they squeezed the rate until it bounced out of their pressure to the downside to the 20-hour SMA at 1.1281, which was at the moment located exactly on the weekly PP. Afterwards the rate moved northwards together with the 20-hour SMA until it broke off and moved to surge below the 200-hour SMA, and the pair will most likely continue to do so during the rest of the session, as SMAs move upward.
Hourly chart
Traders remain bearish on Friday
OANDA trader bearish sentiment has increased compared to Thursday's 63.35%, as, at the moment, 64.80% of OANDA open positions are short. In addition, SAXO Bank clients have increased their bearish stance, as their open short positions are now at 69.35% compared to 67.65% of last trading session.