Yesterday (6th August), the pair EUR/USD rose slightly. Ending the session, the price closed at $1.09239, up 0.18% compared to the opening price of $1.09404.
U.S Labor Department yesterday released the number of applications for unemployment benefits last week reached 270,000, higher than the previous week data of 267,000. Although the difference is not too much, it affects investors’ sentiment as the labor market has not shown signal of solid growth. The data pressured the U.S dollar index that measures the strength of the dollar to falll, supporting the pair EUR/USD to go up.
The market is closely waiting for the data of non-farm employment change which impact significantly on the volatility of the currency pair today. It’s Because the Federal Reserve (Fed) will base on the statistics of the employment change, unemployment rate and wage growth to gauge the U.S economy’s health to decide when to raise interest rates. Upbeat economic data reinforces expectation on the Fed’s rate hike in Septemner meeting, supporting the Dollar to rise, so the pair EUR/USD will drop.
According to the economist’s prediction, new jobs created in July is 222,000, below last month’s figure of 223,000. The unemployment rate is expected to stabilize at 5.3% while the average hourly wage will increase by 0.2%. If the figures are as upbeat as expectation, it is likely the pair will go up.
The positive news from Greece somewhat reduced the pressure on the Euro. While Germany’s Bild newspaper reported that the a German government official expressed doubts about the bailout agreement worth 86 billion Euro is difficult to achieve in the next 2 weeks, and said “That can not be achievable.” The European Commission (EC) relexed this situation with possitive comments. Spokeswoman Mina Andreeva said that Chairman Juncker expressed satisfaction with the progress of the negotiations with the Greek government and it is likely to reach an agreement by 20th August.
Yesterday, the country made IMF satisfied with interest payment of 186.3 million euros. IMF stated: “Greece had made payment up to 186.3 million euros ($ 203.6 million).” The positive signal from Greece also somewhat reduced the pressure on the Euro recently.
However, uncertainty over China’s stock market also has a negative impact on Euro zone’s economies which closely link to Chinese foreign trade. Figure released showed that German industrial production in July unexpectedly dropped by 1.4% after rising slowly in June by 0.2%. This shows that the impact of China to Euro zone is not small, and there is potentially threat to the Euro’s prospects in the future.
Current 2:00 pm GMT+7, the pair EUR/USD is trading at $1.09220, down of 0.01% compared to the opening price of $1.09236.
Forecast: The pair EUR/USD is still bearish. However, today the pair will fluctuate with non-farm data. It’s predicted that today the pair will rise to $1.10000 area. If the U.S employment data is downbeat, the pair will be pushed down, may reach $1.08000.