EUR/USD: Steady Ahead of ECB, US Payrolls

EUR/USD is showing little movement on Thursday, as the pair trades in the mid-1.36 range in the European session. On the release front, Spanish Unemployment Change posted a sharp decline, but fell short of expectations. It's a busy day on the release front, and traders can expect some movement from EUR/USD during the day. In the Eurozone, Eurozone and Spanish Services PMI softened, while Italian Services PMI improved. Eurozone Retail Sales dropped to a flat 0.0%, its worst showing in five months. Later in the day, the ECB will announce its benchmark interest rate, followed by a press conference hosted by ECB head Mario Draghi. In the US, employment data is in the spotlight, with the releases of Nonfarm Payrolls, the Unemployment Rate and Unemployment Claims. As well, the US will release Trade Balance.

Will the ECB take any dramatic action at its policy meeting later on Thursday? Most analysts are saying no, with the ECB expected to hold rates at the record low of 0.15% and maintain current monetary policy. At the June meeting, the ECB took unprecedented steps to combat low growth and inflation, including negative deposit rates. These measures were intended to boost inflation and growth levels, but that hasn't occurred, at least not yet. This was reaffirmed with the release of Eurozone Retail Sales on Thursday, the primary gauge of consumer spending. The indicator dipped to 0.0%, shy of the estimate of 0.3%.

Weak German data continues to be a source of concern. The week started with Retail Sales, the primary gauge of consumer spending, posting its third straight decline. The indicator came in at -0.6% last month, well off the forecast of +0.8%. Unemployment Change, which had posted strong declines in the first quarter of the year, has reversed direction and recorded two straight gains, pointing to trouble in the employment sector. In June, the indicator came in at +9K, compared to an estimate of -9K. The euro is sensitive to German data, as Germany is the largest economy in the Eurozone.

In the US, ADP Nonfarm Payrolls was outstanding, soaring to 281 thousand, up from 179 thousand a month earlier. This crushed the estimate of 207 thousand. Will the official Nonfarm Payrolls follow suit? The markets are expecting a reading of 214 thousand, slightly below the May reading. The Unemployment Rate and Unemployment Claims are also expected to show little change. If there are any surprises from these key indicators, traders can expect some movement from EUR/USD during the day.

EUR/USD 1.3654 H: 1.3664 L: 1.3645