The euro continues to have a quiet week, in marked contrast to the sharp drops we saw last week. On Wednesday, EUR/USD is trading in the low-1.29 range. It could shape up to be an uneventful day for the pair, with no major releases out of the Eurozone or the US.
Will the real Germany please stand up? Recent German numbers have been mixed. GDP and Business Climate were weak, while recent manufacturing data has been sharp. This week started off on a high note, as the trade surplus climbed to EUR 22.2 billion, up from 16.2 billion a month earlier. This easily beat the estimate of 17.3 billion. The strong figure follows impressive German manufacturing data last week, led by Industrial Production, which gained 1.9% in August, its strongest showing in 2014. The euro is sensitive to German data, as Germany boasts the largest economy in the Eurozone.
US numbers continue to point to a deepening recovery, but the labor market is showing some troubling signs. JOLTS Job Openings was unchanged in August at 4.67 million, short of the estimate of 4.72 million. On Friday, the eagerly-anticipated Nonfarm Employment Change crashed to 142 thousand, its lowest gain since January. This surprised the markets, which had expected a gain of 226 thousand. The disappointing release follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims.
After months of fighting in eastern Ukraine between government forces and pro-Russian fighters, a ceasefire which began on Friday appears to be holding up, although some sporadic fighting has been reported. Russia has denied assisting the rebels, but both Ukraine and NATO have said that Russian forces are actively involved in the fighting. The crisis has severely strained relations between the West and Russia, and trade between Europe and Russia could be significantly affected. European countries have already implemented sanctions against Russia, and have threatened further sanctions if the ceasefire does not last.
EUR/USD 1.2951 H: 1.2952 L: 1.2923
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