- SWFX market sentiment is 60% bearish
- Trader set up pending orders are 58% short
- Pair opened Monday's session at the 1.1156 level
- Aggregate daily technical indicators bet EUR/USD will decline
- Economic events to watch over the next 24 hours: Spanish PMI Service (August); Italian PMI Service (August); French PMI Service (August); French PMI Composite (August); German PMI Service (August); German PMI Composite (August); EU PMI Service (August); EU PMI Composite; EU Retail Sales (July); US Labor Market Conditions Index (August)
Fewer jobs were created than expected in the United States last month, official data revealed on Friday. According to the Labor Department, total nonfarm payroll employment in the country jumped 151,000 in August, following July's upwardly revised gain of 275,000, whereas market analysts expected the economy to add 180,000 new jobs in the reported month. Over the past three months, job gains averaged 232,000, compared with 182,000 for the first eight months of 2016. Furthermore, average hourly earnings advanced 0.1%, down from July's 0.3%, while the average workweek dropped to 34.3 hours in the same month from July's 34.4, leading to a 0.2% decline in the index of aggregate weekly hours. Over the past month, job growth in construction and manufacturing was weak, while strong in retail, healthcare, leisure, and government sectors. The headline unemployment rate remained unchanged at 4.9%, whereas economic desks anticipated a slight deceleration to 4.8% during the reported period. Average hourly earnings held steady at 2.4% in the same month. On Wednesday, payroll processor ADP said US companies created 177,000 new jobs in August, slightly surpassing the 174,000 market forecast. The report put into question the possibility of an interest rate increase by the Federal Reserve at its September meeting.
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.
Upcoming fundamentals: European PMIs, retail sales and US labor market conditions
The EUR/USD pair will be affected on Monday by the strength or weakness of the common Europan currency, as it is Labor Day in the US and the markets are closed in the US. However, at 14:00 GMT Labor Market Conditions Index will be released for August. Before that from 7:15 GMT to 8:00 GMT European countries will publish PMI Services indices for August and the sub sequential PMI Composite indices. In addition at 9:00 GMT Europan Retail Sales for July will be published as a monthly and annual change in percentage.
EUR/USD trading back below 1.12 level on Monday
Daily chart: The common European currency is between two strong clusters against the US Dollar on Monday, as the currency exchange rate previously on Friday retreated from the 1.12 level by the end of day's trading session. However, the resistance from the upside is stronger, as the support cluster, and the daily aggregate technical indicators forecast a fall for the currency exchange rate during today's trading session. Due to that, it is most likely that the Euro will depreciate against the Greenback by the end of Monday's trading.Daily chart
Hourly chart: The hourly chart for the EUR/USD pair shows that the rate traded flat on Friday until it saw huge volatility from 12:00 to 14:00 GMT. The period of high volatility ended with a candle closing near the 1.1150 level. However, since then the currency exchange rate has been slowly surging through various resistance levels. Although, the outlook for the pair is that it is set to bounce off of one of the levels it will encounter during the day.
Hourly chart
Traders are bearish at the start of a new week
OANDA trader bearish sentiment has decreased compared to Friday's 55.12%, as, at the moment, 50.9% of OANDA open positions are short. In the meantime, SAXO Bank clients have also decreased their bearish stance, as their open short positions are now at 63.79% compared to 65.32% of last trading session.