It’s been an uneventful week for the euro, which is showing little movement in the Thursday session. Currently, EUR/USD is trading just above the 1.09 line. On the release front, German and Eurozone Services PMIs continue to show expansion and were above expectations. Later in the day, ECB President Mario Draghi will speak at an event in Switzerland. In the US, today’s major event is unemployment claims, which is expected to drop to 246 thousand. On Friday, the US releases wage growth and nonfarm payrolls reports, so traders should be prepared for some movement from EUR/USD.
As expected, the Federal Reserve stayed on the sidelines on Wednesday, holding the benchmark rate at 0.75 percent. The Fed rate statement was hawkish, as policymakers emphasized the positives and donwplayed a soft first quarter. The statement noted that consumer spending remains strong and that inflation was ‘running close’ to the Fed’s 2 percent target. The Fed’s message is clearly one of optimism, as the central bank remains on track to raise interest rates twice more in 2017. The Fed’s bullish statement immediately raised the likelihood of a rate hike at June meeting, which jumped to 74 percent after the statement, up from 63% before meeting. The Fed has two key goals which have been achieved, namely full employment and an inflation rate of 2%. One area of concern is the balance sheet, which stands at $4.5 trillion. The minutes of the March meeting stated that policymakers want to start reducing this figure before the end of 2017, and we could see another reference to the balance sheet in the April minutes.
The eurozone has enjoyed a solid first quarter, and more growth has meant more jobs and lower unemployment figures. Just a year ago, the eurozone unemployment rate was at 10.3%, but the rate has been steadily decreasing since then. The March release remained unchanged at 9.5%, within expectations. Germany has led the way, with the unemployment rate dropping to 5.9% in February. Unemployment rolls continue to shrink in Germany, and the decline of 15,000 unemployed persons was better than the estimate of 10,000. Services PMI reports for March have also looked solid, with the eurozone, Germany and France all posting figures pointing to expansion.
It’s Election Day (again) in France on Sunday, with Emmanuel Macron and Marine Le Pen vying for the next president of France. The euro and European stock markets have been very steady in the second round of the campaign, as opinion polls continue to show a comfortable majority for Macron:
The polling average line looks at the five most recent national polls and takes the median value, ie, the value between the two figures that are higher and two figures that are lower.
Source – BBC
French Election Timeline
May 3 – TV debate between the two remaining candidates
May 5 – [from midnight] Poll blackout
May 7 – Second round of French presidential elections. Last polls close at 19:00 BST / 14:00 EDT, with an exit poll result announced immediately.
May 11 – Official proclamation of the new President.
May 14 – [from midnight] End of Francois Hollande’s mandate
June 11 – First round of legislative elections
June 18 – Second round of legislative elections.
