What had been an uneventful week changed dramatically on Thursday, as EUR/USD plunged some 200 points. This followed the ECB announcement to broadly lower interest rates and also announced plans to introduce quantitative easing. On Friday, the pair has steadied and is trading in the mid-1.29 range. Taking a look at Friday’s events, German Industrial Production sparkled, with a gain of 1.9%. The US will release Nonfarm Employment Change and the unemployment rate.
It’s no exaggeration to state that Thursday was a shocker, as dramatic monetary action by the ECB sent the euro reeling. The markets had not expected any change to interest rates, but the ECB took the axe and cut the benchmark rate to a record low of 0.05%, down from 0.15%. As well, the deposit facility rate was lowered to -0.20% from -0.10% and the marginal lending rate dropped to 0.30% from 0.40%. ECB head Mario Draghi had more in store, saying that the central bank plans to implement an asset purchase program (QE). Draghi didn’t elaborate, saying the ECB would provide more details in October. The interest rate cuts and QE scheme are intended to bolster anemic growth in the Eurozone and combat the growing threat of deflation.
Recent German numbers have not looked sharp, but this week’s manufacturing numbers continue to impress. German Industrial Production gained 1.9%, its strongest showing in 2014. This handily beat the estimate of 0.5%. Earlier in the week, Factory Orders sparkled. The indicator jumped 4.6% last month, its highest gain since November 2011. This easily beat the estimate of 1.6%, and follows two straight declines.
EUR/USD for Friday, September 5, 2014
EUR/USD September 5 at 9:10 GMT
EUR/USD 1.2955 H: 1.2957 L: 1.2925
EUR/USD Technical
S3
S2
S1
R1
R2
R3
1.2518
1.2688
1.2806
1.2905
1.2984
1.3104
EUR/USD was flat in the Asian session. The pair has edged higher in European trade.
1.2984 is an immediate resistance line. 1.3104 is stronger.
1.2806 is providing strong support.
Current range: 1.3104 to 1.3175
Further levels in both directions:
Below: 1.2806, 1.2688, 1.2518 and 1.2353
Above: 1.2905, 1.2984, 1.3104 and 1.3175
OANDA’s Open Positions Ratio
EUR/USD ratio is pointing to gains in long positions on Friday. This is consistent with the pair’s movement, as the euro has made small gains. EUR/USD continues to show a strong majority of long positions, indicative of trader bias towards the euro heading to higher ground.
EUR/USD Fundamentals
00:15 US FOMC Member Richard Fisher Speaks.
1:00 US FOMC Member Narayana Kocherlakota Speaks.
6:00 German Industrial Production. Estimate 0.5%. Actual 1.9%.
9:00 Eurozone Revised GDP. Actual 0.0%.
12:30 US Nonfarm Employment Change. Estimate 226K.
12:30 US Unemployment Rate. Estimate 6.1%.
12:30 US Average Hourly Earnings. Estimate 0.2%.
*Key releases are highlighted in bold
*All release times are GMT
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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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