EUR/USD is steady on Monday, as the pair trades close to the 1.36 line in the European session. It's a quiet start to the week, with no US releases on the schedule. In the Eurozone, German Industrial Production posted a decline, while Sentix Investor Confidence improved in June. As well, the Eurozone finance ministers meet in Brussels.
German data continues to look sluggish, as the largest economy in the Eurozone is showing signs of distress. On Monday, Industrial Production came in at -1.8%, its sharpest decline since November 2012. The markets had expected a modest gain of 0.3%. Last week's releases pointed to trouble in the Eurozone's largest economy, with weak figures from Retail Sales, Unemployment Change and Factory Orders. If German numbers continue to miss expectations, we could see the euro lose ground.
US employment numbers were the perfect prelude to a long holiday weekend in the US, as Nonfarm Payrolls and the Unemployment Rate sparkled. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and remarks by Fed policymakers are sure to be under the market microscope.
As widely expected, the ECB maintained the benchmark interest rate at 0.15% at its July policy meeting. This was is sharp contrast to the previous meeting, in which the ECB lowered the benchmark rate from 0.25% and introduced negative deposit rates for the first time. At this week's meeting, ECB head Mario Draghi noted that inflation rates remain very low, and said that the ECB was ready to implement "unconventional instruments" if necessary. As well, Draghi reiterated that the ultra-low interest rates would remain at current levels or lower for the foreseeable future.
EUR/USD 1.3590 H: 1.3601 L: 1.3576
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