EURUSD: markets await the NFP report

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On Thursday the 31^st of August, trading on the euro/dollar currency pair closed up. After dropping to 1.1823, the euro recovered 82 pips to reach 1.1905. I think that the pressure on the US dollar came more from the loonie than from the mixed US data.

The Canadian dollar rose by 1.6% against its US counterpart after the publication of Canadian GDP data. This acted as a driver for the other major currencies against the greenback. The GDP index grew by 0.3% over the course of the month, and 1.1% over the second quarter, its biggest rise in 6 years.

US data:

• Pending home sales: -0.8%.
• Chicago PMI: 58.9.
• Initial jobless claims (25 Aug): 236,000 (forecast: 237,000, previous: 235,000).
• Personal income: +0.4% (forecast: +0.3%, previous: 0.0%).
• Personal spending: +0.3% (forecast: +0.4%, previous: (0.2%).

Day’s news (GMT+3):

• 10:15 Switzerland: retail sales (Jul).
• 10:30 Switzerland: SVME PMI (Aug).
• 10:55 Germany: Markit manufacturing PMI (Aug).
• 11:00 Eurozone: Markit manufacturing PMI (Aug).
• 11:30 UK: Markit manufacturing PMI (Aug).
• 15:30 USA: average hourly earnings (Aug), nonfarm payrolls (Aug), unemployment rate (Aug).
• 16:30 Canada: Markit manufacturing PMI (Aug).
• 16:45 USA: Markit manufacturing PMI (Aug).
• 17:00 USA: ISM manufacturing PMI (Aug), Michigan consumer sentiment index (Aug), construction spending (Jul), ISM prices paid (Aug).

EURUSD rate on the hourly. Source: TradingView

Thursday turned out to be rather volatile ahead of the monthly US payrolls report. After a sharp bounce from 1.1823, a daily pin bar formed. On the hourly timeframe, the pin bar shows up as a V-model. It’s a reversal pattern, but it probably won’t dictate price dynamics as today’s key event is the payrolls.

With strong US data, the euro should renew yesterday’s minimum of 1.1823. With weak data, we’ll see the euro return to 1.1990. I don’t make forecasts for the currency market on payrolls day since the indicator has a strong influence on the currency market due to its unpredictability as well as the constant revision of the previous two months’ values.

Market expectations are already factored into the price, but as a rule, these expectations are rarely met by reality, so the market will take some time to adjust to the new data. If the price moves in line with expectations, the movement will be strong. If not, the price will move against expectations and could later reverse to follow the forecast. I would avoid worrying about all these forecasts and wait until the NFP is published before entering the market.

Given that US exchanges will be closed on Monday due to a national holiday, volatility on the currency market today is expected to be high.