EUR climbed to one month highs against the US dollar on Friday, after a report showed that inflation in the Euro zone is advancing at a faster-than-expected pace and the unemployment in the zone is declining.
Having reached highs unseen since October 31-st at 1.3622 at 6:16 GMT. EUR/USD pair ended the week just below the psychological level of 1.3600 to trade at 1.3591, losing 0.11% for the day. The cross registered a third consecutive weekly gains of 0.26%. Support was likely to be received at November 28th low, 1.3564, while resistance was to be met at October 31st high, 1.3738.
On Friday, the annual harmonized index of consumer prices in the common currency zone rose to 0.9% in November, according to preliminary figures. This rate of inflation exceeded the expected 0.8% annual pace. In October the annualized inflation rate slowed down to 0.7%, which bolstered fears of deflation and prompted the European Central Bank to introduce a cut of its benchmark rate to a new record low level of 0.25%. Still, the annual rate of inflation remains well below ECB’s objective of 2%, which is considered as providing price stability.
The above mentioned preliminary data, regarding inflation, also suggested that the ECB will probably refrain from adding to monetary stimulus.
The rate of unemployment in the Euro zone was reported to have decreased for the first time in four years in October to reach 12.1% from the record level of 12.2%, recorded a month earlier. This appears to be the first drop in region’s unemployment since February 2011. The result outstripped forecasts, but however, it does not reflect the huge contrast in labor market situation in bloc’s developed nations and the peripheral economies.
Meanwhile, market palyers are keeping a close eye on the release of the Institute for Supply Management (ISM) report due next week. The report will probably say that its index of manufacturing activity fell to a value of 55 in November from 56.4 in the preceding month, which was the highest level since April 2011, according to the median estimate of economists participated in a survey by the same media. The official report is scheduled for release on December 2nd.
During the upcoming week investors attention will be focused on the string of crucial economic data, scheduled for release out of the United States and the Euro zone.
On Monday, December 2nd, a report on the Final Manufacturing PMI in Germany and in the Euro zone for November is awaited.
On Wednesday, December 4th, reports on the Final Services PMI in Germany and in the Euro zone for November, the Euro zone preliminary GDP quarterly and yearly data, the Euro zone retail sales on a monthly and yearly basis and the Existing Home Sales in US for September and October are all expected to be released.
On Thursday, December 5th, the ECB will be deciding about its benchmark interest rate, while in the US a report about the initial jobless claims for the week ended November 30th, together with preliminary quarterly GDP data will be released.
On Friday, December 6th, a report about the US unemployment rate will be released.
Better US results may provide support to greenbacks demand.