EURUSD closes the week on a strong note
Gary Christie December 4, 2020 7:04 PM
Continued upside momentum after breakout: Chart
The US Dollar was mixed against its major pairs on Friday. On the US economic data front, Change in Nonfarm Payrolls dropped to 245K on month in November (460K expected), from a revised 610K in October. The Unemployment Rate declined to 6.7% on month in November (as expected), from 6.9% in October. The Trade Deficit expanded to 63.1 billion dollars on month in October (64.8 billion dollars expected), from a revised 62.1 billion dollars in September. Factory Orders increase 1.0% on month in October (+0.8% expected), compared to a revised +1.3% in September. Finally, Durable Goods Orders rose 1.3% on month in the October final reading (as expected), in line with the October preliminary reading.
On Monday, no major economic data is expected.
The Euro was also mixed against most of its major pairs but strongly bearish against the CAD. In Europe, Research firm Markit has published November U.K. Construction PMI at 54.7 (vs 52.0 expected). Separately, the German Federal Statistical Office has posted October factory orders at +2.9% (vs +1.5% on month expected).
The Australian dollar was weaker against most of its major pairs with the exception of the JPY and NZD.
Regarding the week's U.S. economic data front:
Factory Orders increased 1.0% on month in October (+0.8% expected), compared to a revised +1.3% in September. Durable Goods Orders rose 1.3% on month in the October final reading (as expected), in line with the October preliminary reading.
On the jobs front, Change in Nonfarm Payrolls dropped to 245K on month in November (460K expected), from a revised 610K in October. The Unemployment Rate declined to 6.7% on month in November (as expected), from 6.9% in October. Initial Jobless Claims declined to 712K for the week ending November 28th (775K expected), from a revised 787K in the week before. Continuing Claims dropped to 5,520K for the week ending November 21st (5,800K expected), from a revised 6,089K in the prior week. Automatic Data Processing's Employment Change showed that 307K jobs were added on month in November (440K expected), compared to a revised 404K jobs added in October.
Markit's US Manufacturing Purchasing Managers' Index remained at 56.7 on month in the November final reading (as expected), in line with the November preliminary reading. Construction Spending rose 1.3% on month in October (+0.8% expected), compared to a revised -0.5% in September. Market News International's Chicago Business Barometer dropped to 58.2 on month in November (59.0 expected), from 61.1 in October.
The Trade Deficit expanded to 63.1 billion dollars on month in October (64.8 billion dollars expected), from a revised 62.1 billion dollars in September.
Regarding housing, The Mortgage Bankers Association's Mortgage Applications slipped 0.6% for the week ending November 27th, compared to +3.9% in the previous week. Pending Homes Sales declined 1.1% on month in October (+1.0% expected), compared to a revised -2.0% in September.
Lastly, The Federal Reserve's Beige Book stated that most Districts described economic expansion as moderate since the last reporting period. Nearly all Districts reported that employment rose, but for most, at a slow pace and that a full recovery is still incomplete. In most Districts, companies disclosed that input prices rose modestly, along with selling prices of final goods. However, the rise in Covid-19 cases has brought about more school and plant closures as well as renewed fears of infection.
The most active currency pair of the week was the EURUSD which climbed 1.56% (187 pips). From a technical perspective, the pair is gaining upside momentum after breaking above a consolidation zone that was in place since July. As long as 1.20 remains support, look for a continuation of the uptrend towards our next target resistance level of 1.2265 and 1.2415 in extension. A break below 1.20 could pressure the pair back into a consolidation.
Source: GAIN Capital, TradingView
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.