Further Pressure on the Dollar In Spite of Strong Data

Despite the strong economic data in the United States, the US dollar came under pressure on Friday afternoon. Is bearish on the greenback, which has allowed the EURUSD to finish the week above $ 1.25, would be explained by the cut positions by speculators in the foreign exchange market that a change management due to a deterioration in the US economy.

At the beginning of this new week, traders will scrutinize the various statistical euro eurozone this morning, namely the trade figures for the currency bloc. While the evolution of European trade balance will influence the exchange rate of the euro over the medium / long term contracts rather should focus on the events this afternoon.

This is especially the testimony of the president of the European Central Bank (ECB), Mario Draghi in Brussels to 15h CET that will attract the attention of traders today. Draghi will make his quarterly hearing before the European Parliament Committee on Economic and Monetary Affairs of the European Parliament.

The next US statistics will also follow. At 14:30, the Empire State manufacturing index for the New York area will be published. This statistic is expected to surge to 12.0 in November against 6.17 in the previous month. The industrial production figures at 15.15 should also impact the price of the EURUSD as they are closely watched by the Federal Reserve.

Dollar Falls Back as GBP Gains Strength

While the EUR USD remains stable at around 1,247, sterling collapsed against the other two major Western currencies: compared to the previous evening, the Euro tooks 0.5% to 0,788 and the dollar stood at 0,632.

The British currency is under pressure after the publication of the Inflation Report of the Bank of England, compared with forecasts that tend to move the prospect of raising its key rates next year.

Due to the weakness of the European economy, the central bank has indeed lowered its inflation forecast for the UK, 1.9% to 1.2% for 2014 and from 1.7% to 1.4 % by 2015, and stated that this rate may fall below 1% within six months.

Figures for industrial production in the euro zone exceeded expectations with an increase of 0.6% in September against the forecast 0.2%, but it is not sufficient to allow the euro to appreciate beyond $ 1.25.

According to analysts, EUR USD may therefore continue to trade below 1.25 ‘pending a more important as inflation in Germany Thursday or Gross Domestic Product (GDP) of the region fundamental catalyst euro Friday.

After reaching a new low of seven years at $ 116 Tuesday, the Japanese currency rises against other major currencies: compared to the previous evening, the euro-yen unscrewed 0.8% to 143.5 while the dollar-yen declined by 0.7% to 115.

Euro Dollar Exchange Rate Falls To Lowest in Two Years

The price of EURUSD fell to new 26-month low on Friday as the Dollar rallied to new highs following the strong report on non-farm employment in the United States.

The exchange rate of the euro-dollar pair is now trading below $1.26 for the first time since September 2012, and the single currency may lose further ground against the greenback as markets speculate further on the need for a possible quantitative easing (QE) in the eurozone. These expectations are based on uncertainties related to the effectiveness of the current policy of the European Central Bank (ECB), which will officially launch its program of purchases of securities backed by assets (Asset-Backed Securities) and bonds secure next month.

Despite the rally in the dollar following the NFPs, the price of EURUSD rebounded yesterday and retraced 100% of its decline on Friday, and currency market rates responded. This foot against market falls far under a technical rebound listed in USD pairs, a phenomenon that could help the major currencies to gain even more ground against the greenback during the European session today ‘hui.

Early in the week, we discussed techniques critical thresholds on the carry trade currencies (AUD, NZD, ZAR) and precious metals as well as a temporary halt to the decline in EURUSD scenario. We believe that the EURUSD is still able to record new lows in the coming weeks, but traders should perhaps get used to slowing the downward trend of the euro in October. This is exactly what the Disparity Index (DI), which measures the difference in the market price relative to a moving average, suggests that time.

The DI over 30 weeks is currently on its lowest second quarter of 2012, and this is an area to which we could observe a slower decline in EURUSD. It is too early to speculate on a low point of the euro, but the layout is interesting and will be studying for the rest of the month. Note that we use the DI on 30 weeks as we use the simple moving average of 30 weeks to analyze market cycles.

US Employment Data A Major Mover

The dollar rose broadly during overnight trade, gaining more than 0.2% on average against its major counterparts. Like yesterday, the price seemed to reflect the pre-positioning before the main important announcement instead of a separate catalyst competitor. With the rate decision of the ECB behind them, traders are now fully focused on the outcome of the report on American employment in September.

The object of speculation remains survival theme “risk-on” in place since mid-2012 certainly maintained by the generous stimulus from the Fed. Investors fear that the imminent end of QE3 asset purchases later this month limit initiative, opening the door to risk aversion. The hopes of relief in a combative calming force the ECB to replace the Fed were disappointed with the reluctance of Mario Draghi. Therefore, the markets are wondering if a report on employment can feed paris the Fed will be relatively slow to raise interest rates after the end of QE3.

The forecasts point to an increase of 215,000 jobs in September, up from 142,000 in the previous month disappointing. The higher figure was not taken seriously because of the fact that the already weak August numbers were revised regularly in recent months and years. The evidence to support or go against this theory may prove just as important as the main figure this time.

On the other hand, the main survey data look encouraging. Job creation in the service sector accelerated to the fastest pace since June, while hiring the manufacturing side of the equation, it grew at the fastest speed since March 2012 If this leaves predict an optimistic figure salary, it is possible that paris on the implementation of monetary tightening make up the greenback. Countries likely to view as Australia, Canada and New Zealand could suffer the most in this scenario while the yen is increasing while fears of an imminent withdrawal of stimulus undermine risk appetite. Needless to say, a low score will produce the opposite dynamic.

Weakness Remains On Euro As ECB Meeting Approaches

Still no sign of recovery for the single European currency on the foreign exchange market on Wednesday, although it is trading at its lowest levels in nearly two years against the US Dollar. And on the eve of a meeting of the ECB, the euro was down 0.28% to 1.2598 dollars.

However, the Euro is neutral against its Japanese counterpart, while strolling down 0.14% to 0.7778 versus sterling, but taking 0 11% against the Swiss franc to 1.2076.

The specter of the Fed and a rise in interest rates causes erratic movements after each announcement. The market remains fragile and is awaiting a new impetus from the ECB tomorrow.

Indeed, in the ECB meeting tomorrow a much-anticipated meeting at the end of which its president, Mario Draghi, should detail the program of private fixed income assets last month announced redemptions. The renewed weakness in inflation in the euro zone fell 0.3% in September, far from the normative goal (to 2%), putting pressure on European monetary institution.

And especially as the main indicator of the morning again proves disappointing: it was reported that the PMI was the region stood at 50.3 points for the month, a decrease of 0.4 item sequentially. If the threshold of 50 points that distinguishes expansion and contraction is again crossed, this index measured by Markit however stood at 49.9 points in Germany, is a 15-month low necessarily vector concerns about health largest economy in the euro zone.

The news is very dense again on the macroeconomic front. Before the publication earlier this afternoon figures ADP survey on American private employment in September (2:15 p.m.), which precede the ISM manufacturing index in September (16.00) and construction spending in August (16.00 ), investors were informed this morning of the purchasing managers index (IDA) in the manufacturing sector in the eurozone.

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