By Kenny Fisher
EUR/USD has started the week with losses, after posting gains on Friday. In the Monday session, the pair is trading at 1.1642, down 0.37% on the day. On the release front, the focus on both sides of the pond is on manufacturing reports. German and eurozone manufacturing PMIs were within expectations, with readings of 55.9 and 54.9, respectively. Later in the day, the eurozone releases PPI and the unemployment rate. In the U.S, today's key event is ISM Manufacturing PMI, with the markets bracing for a drop to 58.2 points.
Recent trade tensions are threatening to hamper the eurozone export sector, which in turn could weigh on manufacturing output. This has put the spotlight on German and eurozone manufacturing PMIs, which are bellwethers of the strength of the manufacturing sector. In June, the German and eurozone readings pointed to expansion but also continued a downward trend. Both PMIs have now dropped for six straight months, raising concerns among investors about the strength of the eurozone economy. Germany, the locomotive of the eurozone, produced soft consumer numbers last week. Retail Sales plunged 2.1%, its steepest decline in 2018. As well, Preliminary CPI fell to 0.1%, down from 0.5% a month earlier.
On Friday, the euro moved higher, in response to a dramatic announcement that EU leaders had hammered out a deal on migration. However, the deal was short on details appears to be a stopgap which papers over the deep divisions that still remain in the EU over immigration. German Chancellor Angela Merkel didn't have much time to celebrate the news, as her government is again in crisis. On Sunday, German Interior Minister Horst Seehofer offered to resign, saying the migrant deal didn't go far enough in protecting Germany from illegal immigration. Seehofer heads the CSU, which is the junior coalition partner in the coalition. Merkel will have to find a way to keep Seehofer on board if she wants to stay in power, and if this political crisis continues, the euro could lose ground.
Monday (July 2)
- 3:15 - Spanish Manufacturing PMI. Estimate 53.6. Actual 53.4
- 3:45 - Italian Manufacturing PMI. Estimate 52.6. Actual 53.3
- 3:50 - French Final Manufacturing PMI. Estimate 53.1. Actual 52.5
- 3:55 - German Final Manufacturing. Estimate 55.9. Actual 55.9
- 4:00 - Eurozone Final Manufacturing PMI. Estimate 55.0. Actual 54.9
- 4:00 - Italian Monthly Unemployment Rate. Estimate 11.1%. Actual 10.7%
- 5:00 - Eurozone PPI. Estimate 0.4%
- 5:00 - Eurozone Unemployment Rate. Estimate 8.5%
- 9:45 - US Final Manufacturing PMI. Estimate 54.6
- 10:00 - US ISM Manufacturing PMI. Estimate 58.2
- 10:00 - US Construction Spending. Estimate 0.5%
- 10:00 - US ISM Manufacturing Prices. Estimate 74.3
Tuesday (July 3)
- 2:45 - French Government Budget Balance
- 5:00 - Eurozone Retail Sales. Estimate 0.1%
*All release times are DST
*Key events are in bold
EUR/USD for Monday, July 2, 2018
EUR/USD for July 2 at 5:35 DST
Open: 1.1685 High: 1.1692 Low: 1.1630 Close: 1.1642
EUR/USD has ticked lower in the Asian and European sessions
- 1.1637 was tested earlier in support and is a weak line.
- 1.1728 is the next resistance line.
Further levels in both directions:
- Below: 1.1637, 1.1553, 1.1434 and 1.1312
- Above: 1.1728, 1.1829 and 1.1910
- Current range: 1.1637 to 1.1728