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EUR/USD Gets Boost from Underwhelming US Employment

July 5, 2018 by

EUR/USD rallied today, getting boost from worse-than-expected US employment data. Meanwhile, data in the eurozone was good.

ADP employment rose by just 177k in June, missing the analysts’ average estimate of 190k. On a positive note, the May increase got a positive revision from 178k to 189k. (Event A on the chart.)

Initial jobless claims rose unexpectedly from 228k to 231k last week, seasonally adjusted, instead of falling to 225k as analysts had predicted. (Event B on the chart.)

Markit services PMI slipped a bit from 56.8 in May to 56.5 in June according to the final estimate, which was the same as the preliminary reading and market expectations. Still, it was the second-highest figure since April 2015. (Event C on the chart.)

ISM services PMI, on the other hand, demonstrated an increase from 58.6% in May to 59.1% in June instead of a drop to 58.3% predicted by experts. (Event D on the chart.)

US crude oil inventories rose by 1.2 million barrels last week instead of falling by 4.4 million as analysts had predicted but remained below the five-year average for this time of year. Total motor gasoline inventories increased by 1.5 million barrels but stayed below the five-year average. (Event E on the chart.)

FOMC minutes showed that policy makers were concerned about the potential impact of trade wars:

Most participants noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects on business sentiment and investment spending.

Still, such concerns did not prevent the Committee from anticipating two more interest rate hikes this year. (Event F on the chart.)

On Tuesday, a report on factory orders was released, showing an increase of 0.4% in May, which followed the drop at the same rate in April. Economists had anticipated a smaller gain by 0.1%. (Not shown on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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