After three straight losing sessions, EUR/USD has reversed directions and posted slight gains. In the Thursday session, the pair is trading at 1.1249, up 0.28% on the day. On the release front, German ZEW Economic Sentiment posted a dismal reading of -24.1, just above the estimate of -24.2 points. Eurozone ZEW Economic Sentiment fell to -22.0, much weaker than the estimate of -17.3 points. There are no major U.S. events for a second straight day. On Wednesday, there are key indicators on both sides of the pond. Germany and the eurozone will release GDP, while the U.S. releases CPI reports.
The deadlock between Italy and the EU over Italy’s budget continues to weigh on the markets. The EU Commission has set midnight Tuesday as a deadline for Italy to revise its budget by Tuesday, which it argues raises Italy’s debt and is in breach of EU fiscal rules. However, Italian officials have flatly rejected the EU demands. Matteo Salvini, Italy’s interior minister, stated that the government would not change the budget by “one iota”. The EU could respond with stiff fines, worth billions of euros. There is serious concern in Brussels about that overspending by the Italian government could hurt Italian stocks and bonds, destabilize the banking sector and even lead to contagion in other eurozone members. With Rome and Brussels on a collision course, the fallout could weigh on European stock markets and the euro.
The Fed shows no signs of easing up on interest rate hikes, with Fed policymakers stating that interest rates will continue to rise until the “neutral rate” of between 2.5 percent and 3.5 percent is reached. This means we can expect rate hikes once a quarter in 2019, barring a sharp downturn in the economy. The policy of gradual increases is good news for the U.S dollar, and conversely is bearish for the euro, as higher interest rates means that the greenback is more attractive to investors.
Tuesday (November 12)
- 2:00 German Final CPI. Estimate 0.2%. Actual 0.2%
- 2:45 French Preliminary Private Payrolls. Estimate 0.3%. Actual 0.2%
- 5:00 German ZEW Economic Sentiment. Estimate -24.2. Actual -24.1
- 5:00 Eurozone ZEW Economic Sentiment. Estimate -17.3. Actual -22.0
- 5:14 US NFIB Small Business Index. Estimate 108.0. Actual 107.4
- 10:00 US FOMC Member Brainard Speaks
- 14:00 US Federal Budget Balance. Estimate -116.6B
- Tentative – US Loan Officer Survey
Wednesday (November 13)
- 2:00 German Preliminary GDP. Estimate -0.3%
- 2:45 French Final CPI. Estimate 0.1%
- 5:00 Eurozone Flash GDP. Estimate 0.2%
- 5:00 Eurozone Industrial Production. Estimate -0.4%
- Tentative – German 30-year Bond Auction
- 8:30 US CPI. Estimate 0.3%
- 8:30 US Core CPI. Estimate 0.2%
- 18:00 US Fed Chair Powell Speaks
*All release times are DST
*Key events are in bold
EUR/USD for November 13 at 7:15 EST
Open: 1.1217 High: 1.1257 Low: 1.1217 Close: 1.1249
In the Asian session, EUR/USD ticked lower but has recovered. The pair has shown limited movement in European trade
- 1.1212 is providing support
- 1.1300 is the next resistance line
- Current range: 1.1212 to 1.1300
Further levels in both directions:
- Below: 1.1212, 1.1120 and 1.0992
- Above: 1.1300, 1.1434, 1.1553 and 1.1685
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