EUR/USD is showing little movement in Wednesday trading, as the pair continues to trade in the mid-1.31 range in the European session. US releases started the week on a positive note, as the Manufacturing PMI hit its highest level in over two years. On Wednesday, Eurozone Services PMI numbers were a mix. Spanish and Eurozone Services PMIs posted gains, while Italian Services PMI missed the estimate. Eurozone Retail Sales posted a weak gain and missed the estimate. In the US, today’s highlight is Trade Balance. The markets are expecting the deficit to widen in the September reading.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
- In the Asian session, EUR/USD was almost unchanged, touching a low of 1.3162 and consolidating at 1.3165. The pair is unchanged in the European session.
Current range: 1.3100 to 1.3175.
- Below: 1.31, 1.3050 and 1.30.
- Above: 1.3175, 1.3240, 1.33, 1.3350, 1.3415, 1.3450, 1.3520, 1.3590 and 1.37.
- On the upside, EUR/USD is testing 1.3175. This is followed by 1.3240.
- 1.3100 is providing support. 1.3050 is next.
- 7:15 Spanish Services PMI. Exp. 49.3, actual 50.4 points.
- 7:45 Italian Services PMI. Exp. 49.2, actual 48.8 points.
- 8:00 Eurozone Final Services PMI. Exp. 51.0, actual 50.7 points.
- 9:00 Eurozone Retail Sales. Exp. 0.5%. Actual 0.1%.
- 9:00 Eurozone Revised GDP. Exp. 0.3%. Actual 0.3%.
- 11:30 US Challenger Job Cuts.
- 12:30 US Trade Balance. Exp. -38.7B.
- 14:00 US IBD/TIPP Economic Optimism. Exp. 46.2 points.
- All Day – US Total Vehicle Sales. Exp. 15.8B.
- 18:00 US Beige Book.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
- US starts week with sharp PMI: The first key release out of the US this week did not disappoint, as ISM Manufacturing PMI posted its strongest reading since May 2011. The index rose to 55.7 points in August, beating the estimate of 54.2. Predictably, the strong figure has increased talk about QE tapering in September, but the Non-Farm Payrolls release will be critical for a September move by the Fed. The markets are hungry for any news which could affect the timing of QE tapering, so every US release will continue to be scrutinized under the market microscope.
- Mixed PMIs out of Eurozone: The week started off on a positive note with solid Manufacturing PMIs out of the Eurozone, but Services PMIs were not as strong on Wednesday. Spanish Services PMI climbed from 48.5 to 50.4 points, beating the estimate of 49.3. The Eurozone PMI rose from 49.8 to 50.7 , but fell short of the estimate of 51.0. The Italian PMI showed little change, with a reading of 48.8. This missed the estimate of 49.2 points. The 50-point level separates expansion from contraction. These figures will have to improve if the Eurozone is to get back on the road to recovery.
- Syrian tensions subside, for now: A US military strike against Syria is on hold, after President Obama said on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. Russia has warned the US not to take any unilateral action against Syria, so we can expect tensions to increase, bringing with it market volatility.
- Spanish PMIs Impress: The week started off nicely as Spanish Manufacturing PMI pushed above the 50-point level for the first time in over two years, climbing to 51.1 points. On Wednesday, Services PMI kept pace, jumping from 48.5 to 50.4 points in the September reading. This is the index’s highest level since May 2011. The solid readings indicate that purchasing managers are more confident about the health of the manufacturing and services sectors. The news was not as positive from Spanish Unemployment Change climbed sharply in August. However, this was not unexpected, as Spanish unemployment numbers generally show a temporary sharp drop in the summer months.