Yesterday’s trade saw EUR/USD within the range of 1.1133-1.1209. The pair closed at 1.1195, rising 0.16% on a daily basis, while marking the third gain in the past four trading days. The daily low has been the lowest level since September 25th, when the cross registered a low of 1.1114.
At 6:17 GMT today EUR/USD was losing 0.20% for the day to trade at 1.1173. The pair tested the range support level (S3), as it touched a daily low at 1.1171 at 6:18 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
Producer prices
The annualized index of producer prices (PPI) probably fell 2.4% in August, according to market expectations, after a 2.1% decline in July. If so, this would be the 25th consecutive month, when annual producer prices slumped and also the steepest annual drop since February 2015, when the PPI fell 2.8%. The Producer Price Index measures changes in prices of goods and services either as they leave the production process, or as they enter it. Unlike the CPI, which measures price changes from the consumers perspective, the PPI basically gauges the prices received by domestic producers for their output, or the prices paid by domestic producers for their intermediate inputs. The PPI performance may be used as an early signal for inflationary pressure in economy. Generally speaking, a higher-than-expected PPI reading may have a limited bullish effect on the common currency, as it suggests acceleration in consumer prices, while a lower-than-expected result may have a bearish effect. Eurostat is to release the official report at 9:00 GMT.
United States
Non-farm Payrolls, Unemployment rate, Average Hourly Earnings
Employers in all sectors of economy in the United States, excluding the farming industry, probably added 203 000 new jobs in September, according to the median forecast by experts, after a job gain of 173 000 in August. The latter has been the lowest figure since March 2015, when 126 000 new jobs were added.
Employment in health care and social assistance increased by 56 000 jobs in August, while financial activities sector added 19 000 jobs. Employment in professional and business services continued to trend up, adding 33 000 jobs in August, as well as the food services and drinking places segment, where 26 000 positions were added. On the other hand, manufacturing employment shrank by 17 000 in August, while mining employment dropped by 9 000, according to the report by the Bureau of Labor Statistics (BLS).
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 increased for a third consecutive month in September, going up 0.2%. In August earnings rose 0.3%, or at the fastest monthly rate since May, when they grew 0.3%.
The rate of unemployment in the country probably remained steady at 5.1% in September, according to expectations. It has been the lowest level since April 2008, when a rate of 5.0% was reported.
The total number of people unemployed shrank to 8.0 million in August. The unemployment rate for whites fell to 4.4%, while the rates for adult men (4.7%), adult women (4.7%), teenagers (16.9%), blacks (9.5%), Asians (3.5%) and Hispanics (6.6%) were almost unchanged. The number of people unemployed for less than 5 weeks dropped by 393 000 to 2.1 million in August, while the number of long-term unemployed (those looking for employment for 27 weeks or more) remained at 2.2 million and comprised 27.7% of the unemployed, according to the BLS.
In case the unemployment rate met expectations or even decreased further, this would have a bullish effect on the greenback, because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.246% on October 1st, after which it slid to -0.266% at the close to lose 1.9 basis points (0.019 percentage point) compared to September 30th. It has been the first drop in the past three days.
The yield on US 2-year government bonds climbed as high as 0.657% on October 1st, after which it closed at the exact same level to add 2.8 basis points (0.028 percentage point) compared to September 30th. It has been the first gain in the past four trading days.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 0.923% on October 1st from 0.876% on September 30th. The October 1st yield spread has been the largest one since September 28th, when the difference was 0.925%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.611% on October 1st, after which it slid to 0.545% at the close to lose 4.5 basis points (0.045 percentage point) compared to September 30th. It has been the third drop in the past four trading days.
The yield on US 10-year government bonds climbed as high as 2.072% on October 1st, after which it slipped to 2.047% at the close to add 1.2 basis points (0.012 percentage point) compared to September 30th. It has been the first gain in the past four trading days.
The spread between 10-year US and 10-year German bond yields expanded to 1.502% on October 1st from 1.445% during the prior day. The October 1st yield difference has been the largest one since September 25th, when the spread was 1.515%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.1202
R2 – 1.1209
R3 (range resistance) – 1.1216
R4 (range breakout) – 1.1237
S1 – 1.1188
S2 – 1.1181
S3 (range support) – 1.1174
S4 (range breakout) – 1.1153
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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