The past week was marked by a few major market mover, but it was enough so that EUR/USD consolidate to the upside and come back again in the 1,05 area, after managing to break support in 1, 04 are on Thursday evening.
The upward force of the greenback appeared to have lost ground thus hindering the decline of the euro-dollar to the minimum of the week at 1,0495.
The main market movers from the United States were the GDP and the ISM manufacturing PMI index.
The US gross domestic product was revised downward for the fourth quarter of 2016 and US economic growth in the fourth quarter was 1,9% compared to the previous quarter. The annualized growth in the US, however, is 2%, revised from the previous 2,1%.
US manufacturing PMI index, which in the previous survey had scored 56, rose to 57,7. Analysts had expected a change in the index, therefore the expectations have been revised upwards.
Even from the Eurozone was published the services PMI index calculated by Markit. In February, the indicator dropped to 55,5, against the results previously reported at 55,6.
Finally, the most anticipated data of the week, the unemployment rate of the Euro zone. Unemployment remains stable and in line with forecasts. The figure, for the month of January 2017, marked 9,6% as a result.
Analysts’ forecasts had estimated that it would have been at 9,6%, a figure in line with the results of December 2016. In the previous month, the unemployment rate of the eurozone had in fact amounted to 9,6%.
Unlike the previous weeks, the incoming week will be full of market movers and decisive events for currencies in the Forex market, especially for EUR/USD.
There will be the publication of the report on the US labor market (non-farm payrolls), European Central Bank and Rerserve Bank of Australia March meetings and an update on Chinese economy.
The most important event will certainly be the ECB’s March meeting that comes against a backdrop of deep uncertainty, also because of the forthcoming elections in the Netherlands and France.
The European Central Bank will announce its interest rate decision on Thursday and experts predict that the central bank will keep its key interest rates and its Quantitative Easing program unchanged. The President of the ECB, Mario Draghi, will still reassure the markets that tapering is not an option despite inflation has reached the target of 2%?
Even the US Non Farm payrolls (published on Friday) will be under the lens of the operators: another solid report will be a sign that Federal Reserve will raise interest rates on March meeting (March, the 14-15th).
A weaker-than-expected results could cause a sell-off of the dollar given the recent build-up in anticipation of an interest rate hike in March, while a report within analysts’ expectations or better could strengthen an increase in Fed rates.
Before Friday, industrial orders and the trade balance will be the focus of traders on the dollar.