EUR/USD: Euro Yawns As German Industrial Production Surges

The euro is unchanged in the Monday session. Currently, EUR/USD is trading at 1.1738, up 0.04% on the day.On the release front, German Industrial Production jumped 3.6%, crushing the estimate of 0.7%. Eurozone Sentix Investor Confidence improved to 29.7, above the estimate of 28.6 points. In the US, banks are closed for Columbus Day, and there are no US events on the schedule.

All eyes are on the Catalan parliament, which will meet on Tuesday. Will Catalonia unilaterally declare independence? Catalan leader Carles Puigdemont has said that it is up to the Catalan parliament to approve independence, but it’s unclear what will happen when the regional lawmakers meet. Puigdemont has not had any talks with Spanish Prime Minister Mariano Rajoy as the crisis goes down to the wire. On Sunday, a demonstration against the referendum attracted some 350,000 people, in a show of support for the Spanish government. Which side will blink first? Madrid could literally shut down the Catalan parliament under Spain’s constitution, but has hesitated to take such drastic action. However, if the Catalan parliament declares independence, Rajoy could respond forcefully. The euro was down only marginally last week, but the crisis could hurt the Spanish economy. Last week, two major banks, Caixabank SA (MC:CABK) and B. Sabadell (MC:SABE), said they would relocate their corporate headquarters out of Catalonia, and other large companies could follow suit.

US employment numbers were a mix on Friday. Non Farm Employment change shocked with a decline of 33 thousand, compared to the estimate of a gain of 85 thousand. The weak reading didn’t cause any alarm in the markets, but rather underscored the severe impact of Hurricanes Harvey and Irma, which hit the US in late August and early September. The two storms caused $150-200 billion in damage and also took a toll on the employment market, although the labor market is expected to rebound as the recovery effort intensifies. On a brighter note, wage growth accelerated to 0.5%, above the estimate of 0.3%. This reading is pointing to stronger inflationary pressure, which is good news for proponents of a rate hike. The odds of a December hike have climbed to 91%, which is remarkable, considering that only a month ago, the odds of a December increase were just 31 percent. The markets were also pleased that the unemployment rate fell from to 4.2% in September, down from 4.4% a month earlier.

EUR/USD Fundamentals

Monday (October 9)

• 2:00 German Industrial Production. Estimate 0.7%. Actual 3.6%
• 4:30 Eurozone Sentix Investor Confidence. Estimate 28.6. Actual 29.7
• All Day – Eurogroup Meetings

Tuesday (October 10)

• All Day – ECOFIN Meetings

*All release times are GMT

*Key events are in bold

EUR/USD for Monday, October 9, 2017

EUR/USD For Oct 8 - 10, 2017

EUR/USD Monday, October 9 at 6:20 EDT

Open: 1.1728 High: 1.1748 Low: 1.1720 Close: 1.1738

EUR/USD Technical

EUR/USD inched lower in the Asian session and is showing limited movement in European trade

• 1.1712 is a weak support line
• 1.1876 is the next resistance line

Further levels in both directions:

• Below: 1.1712, 1.1611, 1.1489 and 1.1366
• Above: 1.1876, 1.1996 and 1.2018
• Current range: 1.1712 to 1.1876

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Monday session. Currently, short positions have a majority (60%), indicative of EUR/USD reversing directions out and moving to lower ground.

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