- SWFX market sentiment is 56% bearish
- Trader pending orders are 62% to sell
- Pair opened Wednesday's session at the 1.1202 level
- Aggregate daily technical indicators bet EUR/USD will surge
- Economic events to watch over the next 24 hours: Spanish Services PMI; Italian Services PMI; French Final Services PMI; German Final Services PMI; EU Retail Sales; US ADP Non-Farm Employment Change; US Trade Balance; US Final Services PMI; US ISM Non-Manufacturing PMI; US Factory Orders
Producer prices in the Euro zone dropped at a faster than expected pace in August, after rising for three consecutive months, official figures revealed on Tuesday. According to the European Union's statistics agency Eurostat, the Producer Price Index for the region fell 0.2% on a monthly basis in August, compared to the preceding month's upwardly revised 0.3% gain, while market analysts expected producer prices to increase 0.1% in the reported month. On an annual basis, the PPI declined 2.1% in the same month, slightly up from the upwardly revised fall of 2.6% and in line with analysts' expectations. The August disappointing data confirmed that inflation pressures in the Euro zone remain weak. The drop was mainly driven by low energy prices, which fell 0.8% month-overmonth in August. However, excluding energy prices, the PPI remained stable in the eight month of the year. Economists widely expect consumer prices to rise sharply in the final months of 2016 and in the early part of 2017. After the release, the Euro was seen trading at 0.8746 against the British Pound, 1.0932 against the Swiss Franc, 1.1172 against the US Dollar and 114.31 against the Japanese Yen.
Manufacturing activity in the United States rebounded in September after a disappointing August report, official data showed on Monday. The Institute for Supply Management said its Index of manufacturing activity advanced to 51.5 in September, following the previous month's 49.4, while market analysts pencilled in a 1.0 point-acceleration to 50.4 in the reported month. Back in August, manufacturing output contracted for the first time since February of this year, as only six out of 18 industries reported growth. A number below 50 points indicates contraction in the US manufacturing sector, while a number above indicates improving conditions. Furthermore, the New Orders Index rose to 55.1 the Employment Index jumped to 49.7 in September from last month's 49.1 and 48.3, respectively, while the Price Paid Index remained unchanged at 53.0, in line with analysts' expectations. The data indicated that nine of the 18 industries reported a rise in new orders, while 10 of the 18 industries reported an increase in production last month. After the release, the US Dollar rose against other major currencies, trading at 1.1217 against the Euro, 1.2833 against the Sterling and 101.44 against the Japanese Yen. Meanwhile, the US Dollar Index rose 0.25% to 95.694.
Upcoming fundamentals: EU PMI Services and loads of US data
After a silent day for fundamental data on Tuesday, Wednesday is set to be a busy day. First of all from the EU Services PMI data will be released, starting with the Spaniards at 7:15 GMT. Afterwards, the Italians will publish their Services PMI at 7:45 GMT, and the French and German Final Services PMIs will be out at respectively at 7:50 GMT and 7:55 GMT. At 8:00 GMT the combined EU Final Services PMI will then be released to the public. However, that is not all from the EU, as Retail Sales data will be available at 9:00 GMT. Data affecting the US Dollar and subsequently all of the financial instruments, which involve it, will begin pouring in at 12:15 GMT, when the ADP Non-Farm Employment Change will be published. Afterwards, at 12:30 GMT the US Trade Balance will be out, and at 13:45 GMT the US Final Services PMI will be released. Last but not least the US ISM Non-Manufacturing PMI and US Factory Orders will be published at 14:00 GMT.
Euro back up on Wednesday
Daily chart: The Euro surged on Wednesday morning against the Greenback, as the currency exchange rate erased the losses of previous sessions and attempted to break the resistance cluster, which pressured it lower before. Previously, on Tuesday the currency pair fell to the 1.1138 level, but it managed to change its direction mid-session and end the day at 1.1203. As in that fall the rate touched the channel up pattern's lower trend line and rebounded, it is most likely that today's surge will continue.Daily chart
Hourly chart: The hourly chart reveals additional information about the EUR/USD currency exchange rate. It can be clearly seen that the pair fell to the weekly S1 at 1.1169 at 7:00 GMT on Tuesday, where it remained for some time. However, as the support was passed, news came in from Bloomberg and the Euro skyrocketed against the Greenback at 14:00 GMT. The short term fluctuations stopped at 17:00 GMT at 1.1193. Afterwards the rate began to slowly surge and attempt to break the resistance cluster comprised of the weekly and monthly pivot points.
Hourly chart
Traders remain bearish
SWFX traders have increased their bullish positions by one percent to 44%, compared to yesterday's 43%. In the meantime, pending commands are also bearish, as 62% of set up orders are to sell.
OANDA bearish trader sentiment decreased on Wednesday, as 54.28% of open positions are short. In the meantime, SAXO Bank clients have increased their bearish stance, as open short positions now add up to 64.44% compared to 63.14% during the previous trading session.