Forex Market: EUR/USD daily trading forecast

Yesterday’s trade saw EUR/USD within the range of 1.0704-1.0774. The pair closed at 1.0744, up 0.20% on a daily basis. It has been the fourth gain in the past eight trading days. The daily high has been the highest level since Monday, when a high of 1.0793 was reached.

At 7:17 GMT today EUR/USD was up 0.04% for the day to trade at 1.0747. The pair touched a daily high at 1.0780 during early Asian trade, undershooting the upper range breakout level (R4). EUR/USD has been trading below the weekly central pivot level for a fourth straight day.

Today EUR/USD trading may be influenced by a number of macroeconomic reports and other events as listed below.

Fundamentals

Euro area

ECB Draghi statement

At 8:30 GMT European Central Bank President Mario Draghi is expected to take a statement. Moderate-to-high volatility of the currency pairs containing the euro is usually present during such events.

Industrial output

The seasonally adjusted index of industrial production in the Euro area probably dropped 0.5% in September compared to a month ago, according to market expectations, extending the 0.5% slump in August.

Annualized output probably increased at a pace of 1.3% in September, according to the median forecast by experts. If so, this would be the tenth consecutive month, when annual output grew. In August industrial production expanded 0.9% year-on-year, or at the slowest rate since April 2014, when an annual rate of 0.8% was reported. Augusts index performance was boosted by production of durable consumer goods (a 4.5% increase year-on-year), capital goods (a 2.8% surge) and production of non-durable consumer goods (a 0.9% increase). At the same time, production of intermediate goods shrank 0.6% year-on-year during the same period, while that of energy went down 1.6%.

In July, the highest annual increases in industrial output were reported for Ireland (+15.0%), Malta (+9.3%), Latvia (+6.4%), the Czech Republic and Sweden (both +6.3%), while the most considerable decreases were registered in the Netherlands (-8.9%), Estonia (-2.7%), Finland (-2.3%) and Slovakia (-0.4%).

The index, reflecting the business cycle, measures the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case annualized industrial output expanded at a larger rate than anticipated, this would have a moderate bullish effect on the euro, as it implies a greater probability of inflationary pressure occurring. Eurostat is to publish the official data at 10:00 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 November 6th, probably decreased to 270 000, according to market expectations, from 276 000 in the previous week. It has been the highest number of claims since the business week ended on September 25th, when a level of 277 000 was reported.

The 4-week moving average, an indicator lacking seasonal effects, was 262 250, marking an increase of 3 500 compared to the preceding weeks unrevised average.

The business week, which ended on October 30th has been the 35th consecutive week, when jobless claims stood below the 300 000 threshold, which implied a healthy labor market.

Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or decreased further, this would have a moderate bullish effect on the US dollar.

The number of continuing jobless claims probably dropped to the seasonally adjusted 2 160 000 during the business week ended on October 30th from 2 163 000 in the preceding week. The latter represented an increase by 17 000 compared to the revised up number of claims reported in the week ended on October 16th. 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 13:30 GMT.

Job Openings

The number of job openings in the United States probably remained unchanged at 5.370 million in September from a month ago, according to the median forecast by experts. It has been the lowest figure since June, when 5.249 million job openings were reported. This indicator refers to all positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. Higher-than-projected number of openings will usually have a limited bullish effect on the US dollar. The Bureau of Labor Statistics is to release the official data at 15:00 GMT.

Monthly Budget Statement

The United States probably recorded a government budget deficit of USD 130.0 billion in October, according to market expectations, after a surplus of USD 91.0 billion during the previous month. The latter represented a 14.15% decrease compared to the figure posted in September a year ago.

In September total receipts were at USD 365 billion (a 4% year-on-year increase), while total outlays amounted to USD 274 billion (a 12% year-on-year surge), according to the report by the US Treasury. The budget deficit for the fiscal 2015 was registered at USD 439 billion, which has been the lowest gap since 2007 and also lower than the average of the past 40 years.

A larger-than-projected budget deficit in October would have a moderate bearish effect on the greenback. The Financial Management Service is to publish the official figure at 19:00 GMT.

Fed Speakers

At 14:30 GMT Federal Reserve Chair Janet Yellen is to take a statement, which will be followed by speeches offered by a number of Fed officials.

Bond Yield Spread

The yield on German 2-year government bonds went as high as -0.340% on November 11th, after which it slid to -0.355% at the close to lose 1.2 basis points (0.012 percentage point) in comparison with November 10th. It has been the third consecutive trading day of decline.

The yield on US 2-year government bonds climbed as high as 0.882% on November 11th, after which it closed at 0.878% to add 0.004 percentage point compared to November 10th. It has been the seventh gain in the past eight 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 1.233% on November 11th from 1.217% on November 10th. The November 11th yield spread has been the largest one in more than seven months. The spread grew for an eighth consecutive trading day.

Meanwhile, the yield on German 10-year government bonds soared as high as 0.644% on November 11th, after which it slid to 0.614% at the close to lose 0.008 percentage point compared to November 10th. It has been the third consecutive trading day of decline.

The yield on US 10-year government bonds climbed as high as 2.335% on November 11th, after which it slipped to 2.331% at the close to lose 0.005 percentage point compared to November 10th. It has been the second consecutive trading day of decline.

The spread between 10-year US and 10-year German bond yields widened to 1.717% on November 11th from 1.714% on November 10th. The November 11th yield difference has been the largest one in at least seven months. The spread grew for a fifth trading day in a row.