EUR/USD Fundamental Outlook at 1500 GMT (EST + 0500)

  on

The euro moved moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4845 level and was supported around the $1.4685 level.  U.S. equity markets added to recent gains and the single currency improved today, partially as a result of the increased risk appetite in the markets.  Many data were released in the U.S. today. First, October ISM manufacturing improved to 55.7 from the September reading of 52.6 with the October ISM prices paid component higher at 65.0, up from 63.5.  Also, September construction spending improved to +0.8% from a revised August reading of -0.1%.  Also, September home sales were up 6.1% m/m, down from the August print of +6.4% but still above expectations.  On an annualized basis, September pending home sales were up 19.8%, up from 12.1%.  The big news in the market this week will be Friday's October non-farm payrolls report with many forecasts centering on job losses of 175,000 and an unemployment rate around 9.9%.  An unemployment print at or above 10.0% will be attention-grabbing and could fuel some gains in the U.S. dollar.  Notably, the ISM employment sub-index rallied to 53.1 from September's 46.2 level and this could presage a deceleration in labour market weakness.  Federal Reserve official Greenlee reported significant stress and weaknesses persist in the U.S. banking system.  The Fed is expected to keep interest rates unchanged this week and many Fed-watchers believe there will not be a seismic shift in the Fed's policy statement this week.  In eurozone news, the October EMU-16 purchasing managers' index improved to 50.7 from 49.3 in September, the strongest reading since January 2008. These data add to the view the eurozone economy is likely to grow in the second half of the year.  Germany's manufacturing PMI reading improved to 51 from 49.6 in September.  The European Central Bank is expected to keep monetary policy largely unchanged this week.  Euro bids are cited around the US$ 1.4445 level. 

Join the Discussion