EUR/USD continues to have a quiet week. In the Tuesday session, the pair is trading at 1.1402, down 0.05% on the day. On the release front, Germany and eurozone services PMIs both beat their estimates and pointed to expansion. Eurozone PPI improved to 0.5%, beating the estimate of 0.4%. In the U.S, all eyes will be on the U.S midterm congressional elections. As well, the U.S. releases JOLTS Jobs Openings. On Wednesday, Germany releases industrial production and the eurozone publishes retail sales.
German indicators were lukewarm on Tuesday. Factory orders posted a gain of 0.3% in September, easily beating the forecast of -0.4%. Still, this was a significant drop from the August reading of 2.0%. The trend was similar in the services sector, as Final Services PMI dropped from 55.9 to 54.7 in October, marking a 3-month low. The reading did, however, beat the forecast of 53.6. On Monday, Sentix investor confidence pointed to a sharp drop. The indicator fell from 11.4 to 8.8 points, its lowest level since October 2016. The index has dropped sharply in 2018 – early in the year, the index was above the 30-point level. The eurozone economy slowed to 1.7% in the third quarter, down from 2.2% in the second quarter. There are concerns that the slowdown will continue into Q4, which could weigh heavily on the euro. The currency dropped 2.5% in October, but has started November with modest gains.
The markets are keeping a close eye on the U.S mid-term elections, as voters go to the polls on Tuesday. Many analysts are calling the election a referendum on the presidency of Donald Trump, who has presided over a red-hot economy but has also alienated many voters with his controversial policies on health care and immigration. The labor market is at or beyond capacity, and Friday’s employment numbers underscored the strength of the labor market. Nonfarm payrolls surged to 250 thousand, crushing the estimate of 194 thousand. Wage growth has also strengthened, with strong gains of 3.1% in the past year.
