EUR/USD: Will the NFP confirm a reduction in tensions on American employment?

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The Euro Dollar continued to rely on the decline of the American 10, to grab a few points against the Dollar, in a foreign exchange market which has its eyes fixed on the publication, at 1:30 p.m. (Paris time) of the NFP report. This federal publication on private employment (excluding agriculture) will focus the attention of currency traders – and beyond! – as the measurement of tensions on the job market is an essential factor in the Fed’s thinking for the construction of its monetary policy.

The signals are rather green for this report, notably due to the publication earlier in the week of encouraging elements (ADP survey, registrations for unemployment benefits). Any confirmation of an ebbing of tensions on employment, with its naturally beneficial consequences on the control of inflation, would confirm the Fed in the less anxiety-provoking tone adopted Wednesday at the end of its Monetary Policy Committee.

Here are the different consensuses regarding the publication to follow at 1:30 p.m.: an expected unemployment rate stable at 3.8% of the active population, monthly job creations decelerating sharply to 178,000 (compared to 336,000 in September) and hourly wages averages up 0.3% over one month.

Yesterday, currency traders had to deal with the publication of the final data from the European manufacturing PMI indicators. Data appeared overall at a level slightly higher than the first estimates, published during the month of October. Thus, at the scale of the Euro Zone as a whole, the industrial PMI stands at 43.1 compared to a first estimate of 43.0. Certainly the score is still far, very far from the 50 point mark, which separates by construction, a contraction from an expansion of the sector considered. Among the main industrial powers of the Euro Zone, Germany is at a 5-month high, Italy at 3 months and France at… 41 months.

Dr. Cyrus de la Rubia, Chief Economist at the Hamburg Commercial Bank, takes a step back from these figures: “the continued strong recession in Germany leaves little doubt about the evolution of the economy in these four countries [Italie, Allemagne, France et Espagne]that of a contraction in the manufacturing industry in the fourth quarter.”

At midday on the foreign exchange market, the Euro was trading against $1.0640 approximately.

KEY GRAPHIC ELEMENTS

The framework remains bearish, as long as the 20-day moving average (in dark blue) gravitates below its 50-day counterpart (in orange). In the short term, we are in a phase of congestion under the long moving average, the structure of which does not suggest a clear rebound.

MEDIUM TERM FORECAST

Considering the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD).

We will maintain this neutral opinion as long as Euro Dollar (EURUSD) prices are positioned between support at 1.0550 USD and resistance at 1.0693 USD.

DAILY DATA CHART