EUR/USD: Steady on Mixed US Numbers

EUR/USD is stable on Friday, as the pair is trading in the mid-1.35 range in the European session. On the release front, Eurozone Current Account softened in June and was well short of the estimate. Over in the US, Preliminary UoM Consumer Sentiment is today's major event. On Thursday, US data was mixed. Unemployment Claims looked sharp, and the Philly Fed Manufacturing Index soared last month. However, Building Permits and Housing Starts softened in June.

US Unemployment Claims dropped slightly to 302 thousand, beating the estimate of 310 thousand. This figure marks a seven-week low, as the economy continues to churn out impressive employment data. With Janet Yellen telling Congress that a rate hike could be pushed forward if inflation and employment data exceeds expectations, improving employment data will put more pressure on the Fed to raise rates. At the same time, the housing sector is struggling, and Building Permits fell to 0.96 million, its lowest level since January. The markets had expected a much stronger reading, with an estimate of 1.04M. Housing Starts followed suit, coming in at 0.89 million, compared to an estimate of 1.02 million. Finally, the Philly Fed Manufacturing Index sparkled, jumping to 23.9 points, well above the estimate of 15.6 and its best showing since February 2011.

Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill on Wednesday, testifying before the House Financial Services Committee. Yellen declined to answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. On Tuesday, the dollar moved higher when Yellen said that the economy still required monetary stimulus, but rates could increase sooner than expected if inflation and job numbers improved more quickly than anticipated. The Federal Reserve's asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been trimming the program since last December, when it stood at $85 billion/month. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.

Eurozone CPI, the primary gauge of consumer spending, remained unchanged in June, posting a gain of 0.5%. This matched the estimate, and EUR/USD did not react to the reading. Core CPI, which excludes volatile items, looked even better, climbing 0.8%. This also matched the forecast. Meanwhile, German ZEW Economic Sentiment, a highly regarded survey of institutional investors and analysts slipped to 27.1 points, short of the estimate of 28.9 points. The indicator has been falling steadily since last November, when it was above the 60-point level. The June figure is the weakest we've seen since November 2012. Eurozone ZEW Economic Sentiment brought no relief, as it plunged to 48.1 points, down from 58.4 a month earlier. The estimate stood at 62.3 points. These weak numbers have further raised concerns about the health of the German and Eurozone economies, and the euro could lose more ground.

EUR/USD 1.3519 H: 1.3540 L: 1.3513