The euro continues to lose ground this week. In the Friday session, EUR/USD is trading at 1.1735, down 0.32% on the day. In economic news, Germany’s trade surplus fell to EUR 19.9 billion, missing the estimate of EUR 22.0 billion. This marked a 3-month low. There was better news out of France, as Industrial Production surged 1.9%, crushing the estimate of -0.1%. This marked the strongest manufacturing output reading since May. In the US, the focus is on employment numbers. Nonfarm payrolls is expected to soften to 198 thousand, while wage growth is forecast to rebound with a gain of 0.3%. The unemployment rate, which stands at a sizzling 4.1%, is expected to remain unchanged.
November’s ADP nonfarm payrolls managed to beat expectations earlier this week, but the reading was sharply lower than the October release. Will the official nonfarm payrolls follow suit? The markets are bracing for a soft NFP, with a forecast of 200 thousand, down from 261 thousand in the previous release. Wage growth has been stubbornly low, despite a strong labor market and assurances from Fed policymakers that inflation and wages will move upwards. The markets are expecting some good news on Friday, with Average Hourly Earnings expected to gain 0.3%. The October reading of 0.0% was a disappointment, missing the forecast of 0.2%. Traders should be prepared for some movement from EUR/USD during the North American session.
Ireland is in the spotlight on both sides of the Channel, as the UK and European Union scramble to find a solution to the vexing question of the status of the Irish border after Brexit. An embattled Prime Minister May is desperate to move on to trade talks with the EU, but the Europeans want to wrap up the non-trade issues first. There had been hopes of a major announcement following a meeting between Prime Minister May and European Commission President Jean-Claude Juckner. However, these expectations were left on hold, as it became apparent that wide gaps remain on two key issues – Northern Ireland and the European Court of Justice.
The European Union is willing to let EU rules apply to Northern Ireland, but the small DUP party, which is keeping the May government afloat, is against any steps which could be seen as separating the UK mainland from Northern Ireland. A solution that will satisfy the UK, the EU and the DUP over the Irish border remains elusive. Another thorny issue is whether the European Court of Justice will apply to European citizens in the UK after Brexit. While the EU is in favor of the court having authority over these citizens, many British lawmakers feel that such a move would undermines British sovereignty. The EU holds a key summit on December 12, and all sides are hoping to wrap up the non-trade sticking points before the meeting.
EUR/USD Fundamentals
Friday (December 8)
- 2:00 German Trade Balance. Estimate 22.0B. Actual 19.9B
- 2:45 French Government Budget Balance. Actual -77.1B
- 2:45 French Industrial Production. Estimate -0.1%. Actual +1.9%
- 8:30 US Average Hourly Earnings. Estimate 0.3%
- 8:30 US Nonfarm Employment Change. Estimate 198K
- 8:30 US Unemployment Rate. Estimate 4.1%
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 99.0
- 10:00 US Final Wholesale Inventories. Estimate -0.4%
- 10:00 US UoM Preliminary Inflation Expectations
*All release times are GMT
*Key events are in bold
EUR/USD for Friday, December 8, 2017
EUR/USD for December 8 at 6:10 EDT
Open: 1.1773 High: 1.1777 Low: 1.1732 Close: 1.1735
EUR/USD Technical
| S1 | S2 | S1 | R1 | R2 | R3 |
| 1.1574 | 1.1574 | 1.1657 | 1.1777 | 1.1876 | 1.1961 |
EUR/USD ticked lower in the Asian session and continues to move lower in European trade
- 1.1657 is providing support
- 1.1777 is the next resistance line
Further levels in both directions:
- Below: 1.1657, 1.1574 and 1.1434
- Above: 1.1777, 1.1876, 1.1961 and 1.2092
- Current range: 1.1657 to 1.1777
OANDA’s Open Positions Ratio
EUR/USD is showing slight movement towards long positions. Currently, short positions have a majority (57%), indicative of EUR/USD continuing to move downwards.