Yesterday’s trade saw EUR/USD within the range of 1.0877-1.1041. The pair closed at 1.1015, gaining 1.15% on a daily basis, or the most since December 3rd, when it appreciated 3.07%. The daily high has been the highest level since November 2nd, when a high of 1.1053 was registered.
At 8:46 GMT today EUR/USD was losing 0.45% for the day to trade at 1.0974. The pair touched a daily low at 1.0968 at 8:41 GMT, undershooting the range support level (S3). Support may be received at the 38.20% Fibonacci level (1.0896), which reflects the descent from October 15th high to December 3rd low. Immediate resistance may be encountered at the psychological 1.1000 level and after that at the current daily high (1.1021).
Today EUR/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
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 December 4th, probably remained steady at 269 000, according to market expectations. In the business week ended on November 20th 260 000 claims were reported, or the lowest number since the week ended on October 23rd.
The 4-week moving average, an indicator lacking seasonal effects, was 269 250, marking a decrease by 1 750 compared to the preceding weeks unrevised average.
The business week, which ended on November 27th has been the 39th 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 dropped further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably dropped to the seasonally adjusted 2 152 000 during the business week ended on November 27th from 2 161 000 in the preceding week. The latter represented an increase by 6 000 compared to the revised down number of claims reported in the week ended on November 13th. 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.
Import and Export prices
Prices of imported goods in the United States probably fell for a sixth consecutive month in November, going down at a monthly rate of 0.7%, according to market expectations. In October import prices were 0.5% lower from a month ago, driven by a 2% decline in fuel import prices and a 0.3% dip in non-fuel prices. In annual terms, prices were 10.5% lower in October, which has been the 15th consecutive month of decline. Generally, lower import prices of goods suggest lower rates of consumer inflation and a lesser probability of a rate hike.
Prices of exported goods from the United States probably decreased for a sixth consecutive month in November, falling at a monthly rate of 0.3%. In October export prices were 0.2% lower from a month ago, as agricultural export prices ticked down 0.1%, while prices of non-agricultural goods fell 0.3%, driven by non-fuel industrial supplies and materials, foods, feeds, beverages, automotive vehicles and capital goods. In annual terms, export prices slumped 6.7% in October, or for a 14th month in a row. Lower prices of exported goods generally bolster demand abroad, and as US trade accounts for 20% of international trade relations, this also tends to be dollar positive.
The Department of Labor is expected to release the official numbers at 13:30 GMT.
Monthly Budget Statement
The United States probably recorded a government budget deficit of USD 68.0 billion in November, according to market expectations, after a budget gap of USD 136.0 billion during the previous month. The latter represented an 11.47% increase compared to the figure posted in October a year ago.
In October total receipts were at USD 211 billion (a 0.9% year-on-year drop), while total outlays amounted to USD 348 billion (a 4.8% year-on-year surge), according to the report by the US Treasury. October outlays for defense were at the amount of USD 60 billion, up from USD 55 billion in September, while outlays for Medicare amounted to USD 74 billion in October, up from USD 45 billion in the prior month.
A larger-than-projected budget deficit in November would have a moderate bearish effect on the greenback. The Financial Management Service is to publish the official figure at 19:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.304% on December 9th, after which it closed at -0.316% to lose 0.002 percentage point in comparison with December 8th. It has been 9th drop in the past 13 trading days and also a third consecutive one.
The yield on US 2-year government bonds climbed as high as 0.955% on December 9th, after which it closed at 0.923% to lose 1.2 basis points (0.012 percentage point) compared to December 8th. It has been the 5th drop in the past 18 trading days.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, narrowed to 1.239% on December 9th from 1.249% on December 8th. The December 9th yield spread has been the lowest one since November 17th, when the difference was 1.227%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.615% on December 9th, after which it slid to 0.593% at the close to add 2.3 basis points (0.023 percentage point) compared to December 8th. It has been the 5th gain in the past 13 trading days.
The yield on US 10-year government bonds climbed as high as 2.271% on December 9th, after which it slipped to 2.216% at the close to lose 0.006 percentage point compared to December 8th. It has been the 13th drop in the past 18 trading days and also a third consecutive one.
The spread between 10-year US and 10-year German bond yields shrank to 1.623% on December 9th from 1.652% on December 8th. The December 9th yield difference has been the lowest one since December 4th, when the spread was 1.583%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.1030
R2 – 1.1045
R3 (range resistance) – 1.1060
R4 (range breakout) – 1.1105
S1 – 1.1000
S2 – 1.0985
S3 (range support) – 1.0970
S4 (range breakout) – 1.0925
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0802
R1 – 1.1066
R2 – 1.1246
R3 – 1.1510
S1 – 1.0622
S2 – 1.0358
S3 – 1.0178
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