- SWFX market sentiment is 59% bearish
- Trader set up pending orders are 54% short
- Pair opened Friday's session at the 1.1197 level
- Aggregate daily technical indicators bet EUR/USD will remain unchanged
- Economic events to watch over the next 24 hours: Italian GDP (Q2); US Change in Nonfarm Payrolls (August); US Unemployment Rate (August); US Trade Balance (July); US Factory Orders (July); Fed's Lacker Speaks;
US manufacturing activity fell in the red territory during August despite last month's positive reading. The Institute for Supply Management's Manufacturing PMI came in at 49.4 points in the eight month of the year, following July's 52.6 hike and falling behind the 52.0 market forecast. The manufacturing sector contracted for the first time in five months; however, the overall economy expanded for 87 consecutive months, the report from the ISM showed on Thursday. Other data released by the Labor Department showed that the number of Americans filing for unemployment benefits rose to 263,000 in the week ended August 27, compared to 261,000 claims registered in the previous seven days, while economic desks anticipated a steeper increase to 265,000 during the reported period. The four-week moving average of claims, considered a better measure of labor market trends, dropped 1,000 to 263,000. This marked 78 consecutive weeks of claims below the 300,000 level, the longest streak since 1973. In the meantime, continuing jobless claims increased 14,000 to 2.16 million in the week ending August 20. As the US economy approaches full employment, there is little scope for significant further declines in claims.
Confidence among American shoppers improved unexpectedly in August, according to the Conference Board's monthly survey. The survey's Consumer Confidence Index increased to 101.1 points in the eight month of the year, compared to July's reading of 96.7, while market analysts anticipated a slighter acceleration to 97.1 in the reported month. Nevertheless, back in August 2015, the indicator was higher at 101.4 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 30% of respondents stated that business conditions were "good" in August, following July's 27.3%, whereas 18.4% stated conditions were "bad", unchanged from last month. 17.3% of respondents predicted an improvement in the next six months, compared to last month's 15.7%, while 11.1% predicted deterioration, down from July's 12.4%. The share of respondents expecting their incomes to improve remained resilient; however, the outlook on the job market was mixed. Consumer sentiment among Americans remained in the positive territory for more than a year. A reading of 90 or above indicates economic expansion. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
Upcoming fundamentals: Italian GDP and US employment data and trade balance
As it is the first Friday of the month, various US fundamental data releases are set to occur during the day. However, before that at 8:00 GMT the Italian GDP for second quarter of the year will be released, and the GDP is forecasted to remain unchanged on a quarterly basis. The US data will be released in a big chunk at 12:30 GMT, as Change in Nonfarm Payrolls, Unemployment Rate, Change in Manufacturing Payrolls, Participation Rate for August and the US Trade Balance for July are all going to be published simultaneously. Afterwards at 14:00 GMT US Factory Orders for July will be released. Moreover, the Fed's Lacker will give a speech at 15:00 GMT at Virginia Association of Economists in Richmond.
EUR/USD surges to 1.12 mark
Daily chart: The common European currency traded at 1.12 against the US Dollar on early Friday morning, as the currency exchange rate surged above the newly formed monthly pivot point at 1.1190. Moreover, this move has confirmed that a channel upward pattern exists, which has been formed since the Brexit. Due to that, it is almost safe to assume, that the currency exchange rate is set to surge in the upcoming month to the 1.14 level. Although, today, the rate will struggle with the 20 and 100-day SMAs, as it is squeezed between them and the monthly PP.Daily chart
Hourly chart: The hourly chart shows, that the EUR/USD pair was all the time trading flat, with the exception of two corrections on fundamental data releases. At 7:00 GMT the PMI Manufacturing indices began to come out, which showed, that the manufacturing environment is not as good, as most experts forecasted. However, at 8:00 GMT the Euro surged back to the previous level, as in the downwards fall the weekly S1 at 1.1132 was encountered, and the rate rebounded. The second large move was at 14:00 GMT, when the ISM Manufacturing index for the US came out and showed, that the sector is expecting bad conditions in the future, and with the subsequent US Dollar weakness the rate surged from 1.1137 to 1.1191. Since then, the rate had surged ten pips, as the rate stayed near the 1.12 mark.
Hourly chart
Traders remain bearish on Friday
OANDA trader bearish sentiment has increased compared to Thursday's 53.98%, as, at the moment, 55.12% of OANDA open positions are short. In the meantime, SAXO Bank clients have also increased their bearish stance, as their open short positions are now at 65.32% compared to 61.86% of last trading session.