Yesterday’s trade saw EUR/USD within the range of 1.0631-1.0691. The pair closed at 1.0643, down 0.41% on a daily basis, while marking its third consecutive trading day of losses. The daily low has been the lowest level since April 16th, when a low of 1.0623 was reached.
At 7:22 GMT today EUR/USD was up 0.04% for the day to trade at 1.0646. The pair touched a daily high at 1.0651 at 6:59 GMT, overshooting the daily R1 level. Earlier on Wednesday the pair made an exact test of yesterdays low.
Today EUR/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
Construction output
At 10:00 GMT Eurostat is to report on construction activity in the Euro zone for September. Seasonally adjusted construction output in the region shrank 0.2% in August compared to a month ago, which followed a 1.0% expansion in July. In annual terms, construction output dropped at a pace of 6.0% in August, or the sharpest since April 2013. In July compared to July 2014 output was up 1.8%. This indicator reflects how resilient construction sector development is and also provides clues over investment activity. Higher rates of decrease in output usually have a limited bearish effect on the common currency, while higher rates of increase usually have the opposite effect.
United States
Housing starts, Building permits
The number of housing starts in the United States probably dropped to 1.160 million units in October, according to market expectations, from the seasonally adjusted annual rate of 1.206 million during the prior month. Septembers increase in housing starts was supported by both single-family houses (up 0.3% to reach 740 000) and buildings with five units or more (a 17% surge to 454 000). Housing starts in the West marked the most considerable increase in September (+25.4%), followed by starts in the Northeast (+23.4%) and starts in the South (+0.6%). At the same time, housing starts in the Midwest dropped for the second consecutive month in September, down 12.2%.
Housing starts represent a gauge to measure residential units, on which construction has already begun every month. A start in construction is defined as the foundation laying of a building and it encompasses residential housing primarily.
The number of building permits in the country probably increased to 1.150 million in October from a revised up annual level of 1.105 million in September (1.103 million previously). The latter has been the lowest number of permits since March 2015, when a level of 1.039 million was reported. Single-family authorizations fell at a monthly rate of 0.3% to 697 000 units in September, while permits of units in buildings with five units or more were reported to have dropped 14.6% to 369 000.
Building permits are permits, issued in order to allow excavation. An increase in the number of building permits and housing starts usually occurs a few months after mortgage rates in the country have been reduced. Authorizations are not required in all regions of the United States. Building permits, as an indicator, provide clues in regard to demand in the US housing market. In case a higher-than-anticipated figure is reported, this would support demand for the US dollar. The official report is due out at 13:30 GMT.
FOMC Minutes
At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on October 27th-28th. The minutes offer detailed insights on FOMC’s monetary policy stance. This release is closely examined by analysts and market participants, as it may offer clues over interest rate decisions in the future. High volatility of currency pairs containing the US dollar is usually present after the publication.
During her testimony in front of the House Financial Services Committee in Washington, Federal Reserve Chair Janet Yellen reiterated that US economic development was on track and an adjustment of the banks policy stance in December was appropriate, in case incoming macroeconomic data favored it. Yellen stressed that domestic spending has marked a solid increase, while downside risks to the economy, posed by global macroeconomic and financial developments, decreased.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.350% on November 17th, or the highest level since November 13th (-0.347%), after which it closed at -0.372% to lose 1.7 basis points (0.017 percentage point) in comparison with November 16th. It has been the fifth drop in the past seven trading days.
The yield on US 2-year government bonds climbed as high as 0.888% on November 17th, or the highest level since November 10th (0.891%), after which it closed at 0.863% to add 0.008 percentage point compared to November 16th. It has been the second consecutive trading day of gains.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 1.235% on November 17th from 1.210% on November 16th. The November 17th yield spread has been the largest one in more than six months.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.558% on November 17th, after which it slid to 0.525% at the close to lose 1.3 basis points (0.013 percentage point) compared to November 16th. It has been the seventh consecutive trading day of decline.
The yield on US 10-year government bonds climbed as high as 2.313% on November 17th, or the highest level since November 13th (2.320%), after which it slipped to 2.275% at the close to remain unchanged compared to November 16th.
The spread between 10-year US and 10-year German bond yields widened for a third straight day to reach 1.750% on November 17th from 1.737% on November 16th. The November 17th yield difference has been the highest one in more than six months.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.0649
R2 – 1.0654
R3 (range resistance) – 1.0660
R4 (range breakout) – 1.0676
S1 – 1.0638
S2 – 1.0632
S3 (range support) – 1.0626
S4 (range breakout) – 1.0610
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0761
R1 – 1.0849
R2 – 1.0919
R3 – 1.1007
S1 – 1.0691
S2 – 1.0603
S3 – 1.0533
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