Yesterday’s trade saw EUR/USD within the range of 1.1156-1.1262. The pair closed at 1.1177, losing 0.64% on a daily basis, or the most considerable daily decline since September 21st, when it depreciated 0.90%. The daily low has been the lowest level since September 28th, when the cross registered a low of 1.1146.
At 6:16 GMT today EUR/USD was losing 0.28% for the day to trade at 1.1145. The pair touched a daily low at 1.1140 at 6:05 GMT. It has been the lowest level since September 25th, when a daily low of 1.1114 was registered.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
Manufacturing data by Markit
Activity in Italys sector of manufacturing probably slowed down in September, with the corresponding Purchasing Managers Index dipping to 53.3, as expected by experts. If so, it would be the lowest index value since March 2015, when a level of 53.3 was reported. In August the PMI stood at a reading of 53.8. Markit Economics is expected to release the official data at 7:45 GMT.
Frances final manufacturing PMI probably entered the zone of expansion for the first time in the past three months in September, while confirming the preliminary PMI reading of 50.4, which was reported on September 23rd. In August the final PMI was reported at 48.3, which has been the lowest level since April 2015. The official PMI is due out at 7:50 GMT.
The final reading of German manufacturing PMI probably confirmed the preliminary value for September, with the index coming in at 52.5. If so, it would be the tenth consecutive month of expansion in activity. In August the final PMI stood at 53.3, up from a preliminary value of 53.2. Augusts reading has been the highest since April 2014, when the gauge was reported at 54.1. Markit will release the official reading at 7:55 GMT.
The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value in September, with the index remaining at 52.0. If so, it would be the 27th consecutive month, during which the PMI inhabited the area above 50.0, but it would also mark the lowest index reading since April 2015. The PMI reflects the performance of the manufacturing sector in the Euro area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of Euro zones manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction.
In case the final PMI readings exceeded expectations, this would have a strong bullish effect on the common currency. The official manufacturing data for the Euro region as a whole is scheduled to be released at 8:00 GMT.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on September 25th, probably increased to 270 000, according to market expectations, from 267 000 in the previous week.
The 4-week moving average, an indicator lacking seasonal effects, was 271 750, marking a decrease of 750 compared to the preceding weeks unrevised average.
The business week, which ended on September 18th has been the 29th consecutive week, when jobless claims stood below the 300 000 threshold.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar.
The number of continuing jobless claims probably decreased to the seasonally adjusted 2 236 000 during the business week ended on September 18th. If so, it would be the lowest level since the business week ended on July 10th, when 2 207 000 claims were reported. In the week ended on September 11th there were 2 242 000 claims, a figure representing a drop by 1 000 compared to the revised up number of claims, reported in the business week ended on September 4th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 12:30 GMT.
Manufacturing PMI by Markit – final estimate
The final estimate of the Manufacturing Purchasing Managers Index probably fell to 51.3 in September, down from a preliminary value of 53.0, reported on September 23rd. If expectations were met, this would be the lowest PMI reading since October 2012, when the final gauge was reported at 51.0. In August the final seasonally adjusted PMI stood at 53.0, up from a preliminary value of 52.9.
According to preliminary data by Markit, ”latest increase in new work was the weakest since January 2014, which manufacturers linked to greater caution among clients and subdued overall business conditions.”
”New export orders picked up marginally in September, despite widespread reports that the strong dollar had weighed on demand from abroad. Although only slight, the latest rise was the most marked since February. Weaker overall new order growth and heightened uncertainty regarding the global economic outlook encouraged inventory streamlining and more cautious job hiring across the manufacturing sector in September.”
”The latest increase in payroll numbers was only marginal and the weakest since July 2014. A number of firms commented on the nonreplacement of departing staff and efforts to boost productivity at their plants”, Markit stated.
Values above the key level of 50.0 indicate optimism (expanding activity). In case the final PMI slowed down more than anticipated, this would cause a moderate bearish impact on the US dollar. The final reading is due out at 13:45 GMT.
ISM Manufacturing PMI
Activity in United States’ manufacturing sector probably slowed down for a third consecutive month in September, with the corresponding manufacturing PMI coming in at a reading of 50.7, according to expectations, down from 51.1 in August. If so, this would be the lowest PMI reading since May 2013, when the gauge was reported in the area of contraction (49.0).
The New Orders Index came in at 51.7 in August from 56.5 in July. The sub-gauge of production was reported at 53.6, falling from 56.0 in July. The index of employment slid to a value of 51.2 in August from 52.7 in July. The gauge of inventories of raw materials dropped to 48.5 in August from a reading of 49.5 in the previous month. In August, 10 manufacturing industries reported growth, 6 reported contraction and 2 registered no change in conditions, according to data by the Institute for Supply Management (ISM).
In case of a larger-than-expected slowdown in activity, the US dollar would certainly lose appeal. The official PMI reading by the ISM is scheduled for release at 14:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.240% on September 30th, or the highest level since September 28th (-0.240%), after which it slid to -0.255% at the close to lose 0.004 percentage point compared to September 29th.
The yield on US 2-year government bonds climbed as high as 0.676% on September 30th, after which it fell to 0.637% at the close to lose 1.6 basis points (0.016 percentage point) compared to September 29th, while marking a third consecutive trading day of decline.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, shrank to 0.892% on September 30th from 0.904% on September 29th. The September 30th yield spread has been the lowest one since September 17th, when the difference was 0.883%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.617% on September 30th, after which it slid to 0.586% at the close to lose 0.001 percentage point compared to September 29th. It has been a third consecutive daily drop.
The yield on US 10-year government bonds climbed as high as 2.104% on September 30th, after which it slipped to 2.040% at the close to lose 2 basis points (0.02 percentage point) compared to September 29th, while marking a third straight trading day of decrease.
The spread between 10-year US and 10-year German bond yields shrank to 1.454% on September 30th from 1.473% during the prior day. The September 30th yield difference has been the lowest one since September 17th, when the spread was 1.408%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.1187
R2 – 1.1196
R3 (range resistance) – 1.1206
R4 (range breakout) – 1.1235
S1 – 1.1167
S2 – 1.1158
S3 (range support) – 1.1148
S4 (range breakout) – 1.1119
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.1209
R1 – 1.1315
R2 – 1.1435
R3 – 1.1541
S1 – 1.1089
S2 – 1.0983
S3 – 1.0863
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