EUR/USD – Euro Subdued To Start off Week

 | Feb 08, 2016 06:19AM ET

It’s been a quiet start to the week for EUR/USD, which is trading at the 1.1150 in Monday’s European session. With no major releases out of Europe or the US on the schedule, it could prove to be an uneventful day for the pair. There are only 2 events on the calendar. Eurozone Sentix Investor Confidence is expected to drop to 7.2 points. The US will release the Labor Market Conditions Index.

As the largest economy in the eurozone, Germany is considered the locomotive of the bloc, so German releases should be treated as market-movers. Last week, the December report for German Factory Orders posted a decline of 0.7%, compared to a gain of 1.5% a month earlier.

Germany does extensive trade with China, so the downturn which has gripped the Asian giant, the world’s No. 2 economy, has produced strong ripples across the globe and taken its toll on the eurozone manufacturing sector. We’ll get another look at German manufacturing data on Tuesday, with the release of Industrial Production. (This event has been rescheduled from Monday). The indicator recorded a decline in the November report, and another soft reading could weigh on the high-flying euro.

The euro has surged in February, climbing some 330 points last week. This marked the pair’s strongest weekly gains since March 2015, as the euro trades close to the 1.12 level.

Eurozone numbers have not been particularly impressive, but the euro has taken full advantage of weak US numbers last week, as employment and service sector numbers were short of expectations. ISM Non-Manufacturing PMI, a key gauge of the services sector. The index dipped to 53.2 points in January, its worst showing since March 2014. Unemployment claims rose unexpectedly to 285 thousand, above the forecast of 279 thousand.

The week wrapped up with a dismal Nonfarm Payrolls report, with a small gain of 151 thousand. The markets had expected a much stronger gain of 189 thousand. No less worrying, this figure marks a sharp drop from the previous reading of 292 thousand. These weak job numbers could mean a delay in another US rate hike until after March.

EUR/USD Fundamentals

Monday (Feb. 8)

  • 4:30 Eurozone Sentix Investor Confidence. Estimate 7.2 points
  • 10:00 US Labor Market Conditions Index

*Key events are in bold

*All release times are EST

EUR/USD for Friday, February 8, 2016