EURUSD – Euro shrugs off dismal German ZEW Economic Sentiment

EUR/USD is steady in the Tuesday session, after posting slight gains to start the week. Currently, the pair is trading at 1.1579, unchanged on the day. On the release front, German ZEW Economic Sentiment plunged to a level of -24.7, well below the estimate of -12.3 points. Eurozone ZEW Economic Sentiment followed a similar trend, falling to -19.4, compared to a forecast of -9.2 points. In the U.S, JOLTS Job Openings is expected to dip to 6.90 million. The markets are still waiting for the U.S Treasury to release its semi-annual currency report, which may occur on Wednesday.

Confidence in the German economy continues to sputter, as German ZEW Economic Sentiment dropped sharply to -24.7 in October, after a reading of -10.6 a month earlier. The ZEW assessment noted that there is increased pessimism over the German economy due to the escalating trade war between China and the United States. A second factor is worries over Brexit, with fears that the U.K will depart from the EU without an agreement in place. Both issues have dampened export expectations. The indicator finds itself in negative territory for a seventh straight month. Investor sentiment in the eurozone economy also is weak, with the ZEW Economic Sentiment dropping to -19.4, its lowest level since August 2012.

EU leaders are meeting in Brussels, and officials had hoped that the summit would include a draft statement on Brexit, but this plan has been shelved due to a deadlock over the Irish border. The EU is insisting that it will not sign a withdrawal agreement with Britain, unless there is a backstop which allows Northern Ireland to remain in a customs union with the EU after Brexit. However, the British government is unlikely to agree to such a move, since it would require regulatory barriers within the United Kingdom. With plans for a Brexit statement at Wednesday’s meeting on hold, a Brexit statement with have to wait until EU leaders meet in November or even December, which is extremely close to the Brexit deadline in March 2019.

Asia Market update : A time out

Risk remains on the back foot

EUR/USD Fundamentals

• 2:00 German Import Prices. Estimate 0.1%. Actual 0.0%

• 5:00 Eurozone Trade Balance. Estimate 15.0B. Actual 16.6B

• 5:00 Eurozone ZEW Economic Sentiment. Estimate -9.2. Actual -19.4

• 5:00 German ZEW Economic Sentiment. Estimate -12.3. Actual -24.7

• 6:00 Italian Trade Balance. Estimate 4.34B

• 9:15 US Capacity Utilization Rate. Estimate 78.2%

• 9:15 US Industrial Production. Estimate 0.2%

• 10:00 US JOLTS Job Openings. Estimate 6.90M

• 10:00 US NAHB Housing Market Index. Estimate 68

• 16:00 US TIC Long-Term Purchases. Estimate 50.3B

• 16:15 US FOMC Member Mary Daly Speaks

• Tentative – US Treasury Currency Report

• 5:00 Eurozone Final CPI. Estimate 2.1%

• 5:00 Eurozone Final Core CPI. Estimate 0.9%

• Day 1 – EU Economic Summit

• Tentative -German 30-year Bond Auction

• 8:30 US Building Permits. Estimate 1.28M

• 8:30 US Housing Starts. Estimate 1.21M

• 10:30 US Crude Oil Inventories

• 12:10 US FOMC Member Lael Brainard Speaks

• 12:30 German Buba President Weidmann Speaks

• 14:00 US FOMC Meeting Minutes

Open: 1.1579 High: 1.1599 Low: 1.1566 Close: 1.1579

EUR/USD Technical

EUR/USD ticked lower in the Asian session. In European trade, the pair posted small gains but has retracted

• 1.1553 is providing support

• 1.1611 is the next line of resistance

Further levels in both directions:

• Below: 1.1553, 1.1434, 1.1300 and 1.1190

• Above: 1.1611, 1.1735 and 1.1840

• Current range: 1.1553 to 1.1611