Yesterday’s trade saw EUR/USD within the range of 1.1753-1.1847. The daily low has also been the lowest since December 8th 2005. The pair closed at 1.1792, losing 0.41% on a daily basis.
At 7:46 GMT today EUR/USD was down 0.05% for the day to trade at 1.1786. The pair touched a daily low at 1.1785 at 7:45 GMT.
Fundamentals
Fresh 9-year lows
Yesterday the common currency slumped to lows unseen since December 2005, as Euro area economy continued showing signs of weakness, while the European Central Bank President Mario Draghi pointed to sovereign-bond purchases as part of the set of stimulus measures, purposed to boost activity.
“The ECB is fairly unanimous in trying to get the euro lower as its main strategy,” Ken Dickson, an Edinburgh-based director of foreign exchange at Standard Life Investments Ltd., said by phone, cited by Bloomberg. “It does appear that quantitative easing is more likely sooner than later,” he added.
In a letter to European Parliament lawmaker Luke Flanagan, Mario Draghi echoed the remarks he made after the Governing Council’s most recent meeting on policy, conducted on December 4th. A stimulus package is being prepared by ECB staff, that is to be taken into consideration at the upcoming meeting on January 22nd.
United States
Change in Non-farm Payrolls, Unemployment rate
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 240 000 new jobs in December, according to the median forecast by experts, after a job gain of 321 000 in November. If so, this would be the fourth consecutive month, when employment gains exceeded 200 000. Novembers figure has been the highest since May 2010, when 433 000 jobs were added.
Employment in professional and business services increased by 86 000 in November, compared with an average gain of 57 000 a month during the preceding 12 months. Employment in retail trade rose by 50 000 during the same period, compared with an average gain of 22 000 per month during the past 12 months. Health care added 29 000 jobs in November, manufacturing added 28 000 jobs, while financial activities added 20 000 jobs.
The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading, released most often, varies between 10 000 and as much as 250 000 – 300 000 at times when economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a larger-than-expected gain in jobs, the US dollar would certainly be boosted.
Average Hourly Earnings probably climbed 0.2% in December compared to November, when earnings rose by 0.4%, or the largest monthly rate of increase since February.
Meanwhile, the rate of unemployment in the country probably dropped to 5.7% in December from 5.8% in November. If so, this would be the lowest rate since July 2008.
In November the unemployment rate for adult men climbed to 5.4% in November, the rate for adult women reached 5.3%, while the rate for teenagers was reported at 17.7%. During the month the number of unemployed persons rose to 9.1 million from 9.0 million in October, according to the report by the Bureau of Labor Statistics. The number of long-term unemployed during November (those jobless for 27 weeks or more) was at 2.8 million, down from 2.9 million in the prior month, while accounting for 30.7% of the total number of the unemployed. The number of persons in part-time employment for economic reasons was reported at 6.9 million in November, down from 7.0 million in October.
The unemployment rate represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if he falls in all of the following categories: he/she was unemployed during the last week; he/she is able bodied; he/she has been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People, who have been laid off and are awaiting to be hired again, are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback. The Bureau of Labor Statistics will release the official employment data at 13:30 GMT.
Rate hike prospects
Market players saw a 58% probability that the Federal Reserve Bank will increase the target for the federal funds rate from the current range of 0%-0.25% to at least 0.5% by September, according to futures data by Bloomberg.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1797. In case EUR/USD manages to breach the first resistance level at 1.1842, it will probably continue up to test 1.1891. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1936.
If EUR/USD manages to breach the first key support at 1.1748, it will probably continue to slide and test 1.1703. With this second key support broken, the movement to the downside will probably continue to 1.1654.
The mid-Pivot levels for today are as follows: M1 – 1.1679, M2 – 1.1726, M3 – 1.1773, M4 – 1.1820, M5 – 1.1867, M6 – 1.1914.
In weekly terms, the central pivot point is at 1.2075. The three key resistance levels are as follows: R1 – 1.2151, R2 – 1.2299, R3 – 1.2375. The three key support levels are: S1 – 1.1927, S2 – 1.1851, S3 – 1.1703.
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