EUR/USD is struggling to hold on to the important 1.30 line after storming above this line yesterday. Hopes for a quicker solution for Spain boosted the euro after Draghi made clear that the OMT is ready for this country. However, Spain is still moving slowly and so are the chances of seeing a bank recapitalization program anytime soon. The king of forex indicators, Non-Farm Payrolls dominates the schedule. Will it rebound? A strong close is expected for the first week of the last quarter.
Here’s an update about technical lines, fundamental indicators and sentiment regarding EUR/USD.
- Asian session: Euro/dollar slid from the highs and began a struggle with 1.30.
- Current range: 1.30 to 1.3060.
Further levels in both directions:
- Below: 1.30, 1.2960, 1.2900, 1.2814, 1.2750, 1.2670, 1.2624, 1.2587, 1.2520 and 1.2460.
- Above: 1.3060, 1.3105, 1.32, 1.3290, 1.34, 1.3437, 1.3480 and 1.3540.
- 1.3060 is a strong line on the upside.
- 1.2960 is a clear separator on the downside.
Euro/dollar sliding ahead of NFP– click on the graph to enlarge.
- 9:00 Final GDP. Exp. -0.2%. Actual -0.2%.
- 10:00 German Factory Orders. Exp. -0.5%.
- 12:30 US Non-Farm Payrolls. Exp. +115K. See how to trade the NFP with EUR/USD.
- 12:30 US Employment Participation Rate
- 12:30 US Unemployment Rate. Exp. 8.2%.
- 12:30 US Average Hourly Earnings. Exp. +0.2%.
- 17:00 US FOMC member Elizabeth Duke talks.
- 19:00 US Consumer Credit. Exp. +6.8 billion.
- Uncertainty continues over Spanish bailout: ECB president Mario Draghi made it clear that the central bank’s OMT program is ready for use for Spain, but Spain needs to ask for aid. While Spain is getting closer to such a move, the open question regarding direct bank recapitalization and the northern objection to act for “legacy” issues certainly contributes to the delay. Other reasons for a delay are the relatively lower yields (that could flip anytime) and regional elections on October 21st.
- US jobs high on the political agenda: Bernanke made it clear that he looks at the participation rate and not necessarily the headline unemployment rate. However, the employment figures certainly have an impact on the US elections. In general, the market favors Romney – a better showing by the Republican in the first debate helped markets and weakened the dollar. The jobs report is correlated with Obama’s re-election campaign. So, a better report would hurt the dollar thanks to higher chances for the president and thanks to a lower chance for more Fed stimulus.
- EU, IMF split over Greek bailout: Tensions are rising between Greece’s international lenders, which could spell trouble for the euro. EU leaders have softened their position, and are willing to give Greece more time to meet its repayment obligations. However, the IMF wants to see the European countries write off some of their Greece debt. The EU, for its part, does not relish writing off what could amount to tens of billions of euros. A meeting of European finance ministers is set for October 8th, and could be seen as a deadline to accelerate the talks. Meanwhile, Greece released a draft budget for 2013, and the economic picture is anything but rosy. The economy is expected to shrink by 3.8%, and unemployment is forecast to remain above 24%.
- US Economy – zigzagging continues: The downwards revision of Q2 GDP was quite depressing and showed that the US economy is at stall speed. However, improvement from housing and a surprising drop in jobless claims are positive points. Both and The ISM Non-Manufacturing PMI easily beat the market estimate and the ADP Non-Farm Employment Change pushed higher for the third consecut.... These positive readings have built up the expectations towards the all important Non-Farm Payrolls on Friday.