On Thursday the 5th of July, trading on the euro closed up at 1.1689. The single currency was bolstered by a strong factory orders report from Germany as well as a report from Bloomberg published on the 4th of July. The news report said that several members of the EBC’s governing council think that a rate hike at the end of 2019 will be too late.
On the back of a broadly weaker dollar, the euro recovered to 1.1720, after which a correction took it back to 1.1673. The correction began after the release of positive data from the US.
According to the minutes of the FOMC’s latest meeting, committee members are confident about the future growth of the US economy and about the regulator’s plan for future interest rate hikes.
Initial jobless claims (30 Jun): 231,000 (forecast: 225,000, previous: 28,000).
ISM non-manufacturing PMI (Jun): 59.1 (forecast: 58.3, previous: 58.6).
Markit services PMI (Jun): 56.5 (forecast: 56.5, previous: 56.5).
Day’s news (GMT+3):
09:45 France: trade balance (May).
10:00 Switzerland: foreign currency reserves (Jun).
10:30 UK: Halifax house prices (Jun).
15:30 Canada: imports (May), exports (May), unemployment rate (Jun), net change in employment (Jun).
15:30 USA: trade balance (May), unemployment rate (Jun), average hourly earnings (Jun), average weekly hours (Jun), participation rate (Jun), nonfarm payrolls (Jun).
17:00 Canada: Ivey PMI (Jun).
20:00 USA: Baker Hughes US oil rig count.
Fig 1. EURUSD hourly chart. Source: TradingView
At the time of writing this review, the euro is trading at 1.1705 against an intraday high of 1.1715. Most of the euro crosses are trading up. The dollar is holding its ground in the green against the yen. Buyers are getting ready to attack the range of 1.1720 – 1.1730, which would pave the way towards 1.1835. Market participants are hesitant to enter the market, however, ahead of the NFP report, which comes out at 15:30 EET.
After the NFP report, trader attention will shift back to the trade dispute between the US and China. The US is expected today to impose tariffs on 34bn USD of Chinese goods. As soon as they come into effect, China will impose its own retaliatory tariffs in equal measure.
Volatility is expected to be very high during the US session. Today, we need to keep an eye on the safe havens: the yen, franc, and gold. If the NFP turns out worse than expected, the euro could shoot up to 1.1790 (U3) provided that we don’t see a retreat towards the safe havens.
If the NFP report is better than expected, and the dollar gets a boost across the market, the euro is likely to drop to around 1.1663. The more the report deviates from expectations, the further down we’ll go. The report includes a host of indicators, so it’s far from clear how traders will react to them individually.