After fluctuating for much of the week but remaining largely below the week’s opening levels of 1.1139, the Euro to US Dollar has the potential to shift considerably this afternoon in response to the US June Non-Farm Payroll report. The pair trended in the region of 1.1070 at the time of writing.
Euro (EUR) Weighed on by Data, ECB Minutes
Sentiment towards the Euro has been mixed this week. While the shared currency has remained generally favoured over the British Pound amid Brexit panic, it has been both dragged down by the Pound and left in the dust by small bursts of risk sentiment. As a result, the Euro has been largely limp.
Data has also weighed on the Euro. Most recently, Thursday’s May German industrial production data undermined market expectations by coming in at -1.3% and -0.4% monthly and yearly respectively. Analysts had expected these figures to hold above contraction.
The European Central Bank (ECB) also released its latest minutes report on Thursday. While these were minutes of the June 2
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meeting and came well before Britain’s Brexit result, the warnings included in it weighed on the Euro.
Policymakers agreed that a Brexit had the potential to send shockwaves and real damage across the Eurozone. They agreed that it would be difficult to predict and anticipate, but hinted that the necessary tools to handle inflation were ready to be used if needed.
US Dollar (USD) Limp Ahead of NFP Report
The US Dollar rallied earlier in the week as low risk-sentiment led investors to seek out safer assets, such as the ‘Greenback’ itself.
However, it has weakened since Wednesday as markets began to cool on the latest Brexit-related panics, allowing limited breathing room for risk-on movement.
Investors became anxious towards the US Dollar in the latter half of the week as the widely anticipated release of June’s Non-Farm Payroll report approached.
As a result, Thursday’s less-influential jobless claims figures did little to boost USD sentiment. ADP’s employment change figure came in at 172k, while July 2
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’s new jobless claims figure was at a lower-than-expected 254k.
As this figure was compiled after the Brexit result was announced, it showed promise to some investors that the figure had not been negatively influenced by the Brexit’s effects.
EUR/USD Forecast: US Non-Farm Payrolls to Cause Key Movement
Following May’s highly disappointing NFP figures that shocked markets in early June, this afternoon’s report has multiple reasons to be highly anticipated.
While the June figures are unlikely to have been influenced heavily by Britain’s Brexit result, a strong figure could indicate that the US economy had largely weathered the market’s Brexit-jitters.
Non-Farm Payrolls are often used as a key indication of the health of the US economy, and as a result a better-than-expected score could highly improve US Dollar sentiment as well as make the Federal Reserve a little more hawkish.
On the other hand, poor figures would send the ‘Greenback’ spiralling, and likely cause EUR/USD to surge. Further Brexit-inspired market panic would do the opposite and strengthen the US Dollar, meaning high volatility could be ahead for the EUR/USD exchange rate.