EUR/USD has posted slight losses on Wednesday, as the pair trades at the 1.26 line. The euro continues to wobble and has shed close to 100 points so far this week. Spanish and Eurozone Manufacturing PMIs met expectations, and the Italian release pushed above the 50-point-level. In the US, the markets are keeping an eye on two key events – ADP Non-Farm Employment Change and ISM Manufacturing PMI. The markets are not expecting significant changes from last month’s readings.
The euro remains under strong pressure, and fell over 100 points on Tuesday before partially recovering. It’s been a disastrous September for the euro, which has shed over 500 points against the US dollar. The euro reacted sharply to the Eurozone CPI reading of 0.3%, which matched the forecast but was weaker than the 0.4% gain in August. The inflation rate has now been under 1% for twelve straight months, way off the ECB’s target of just below 2%. On Monday, German Preliminary CPI posted a flat reading of 0.0% for the second straight month. The ECB is feeling the pressure to act, but as Mario Draghi knows all too well, there isn’t any magic formula to creating inflation and improving economic growth.
The markets are keeping a close eye upcoming US employment numbers, starting with ADP Nonfarm Payrolls later on Wednesday. The estimate stands at 207 thousand, little changed from 204 thousand. The ADP release precedes the official NFP release which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with better numbers this month, the US dollar could post further gains against its major rivals.
US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.
EUR/USD 1.2606 H: 1.2632 L: 1.2585
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