Friday’s trade saw EUR/USD within the range of 1.2633-1.2695. The pair closed at 1.2671, gaining 0.19% on a daily basis, while losing 0.72% for the whole week.
Fundamentals
Euro zone
Business climate in Germany probably worsened in October, with the respective gauge slipping to 104.1 from 104.7 in September. If so, this would be the lowest index reading since December 2012, when it stood at 102.4.
The IFO Business Climate Index reflects entrepreneurs’ sentiment in regard to current business situation and their expectations for the next six months. The index is based on a survey, conducted by phone and encompasses 7 000 companies, that operate in sectors such as manufacturing, construction, wholesaling and retailing industry. The Business Climate Balance represents the difference between the percentage share of respondents that are optimistic and the share of respondents that are pessimistic. The balance can fluctuate between -100, which suggests all responding companies assess their situation as poor and expect business conditions to deteriorate, and +100, which suggests all responding companies assess their situation as good and expect an improvement in business conditions. In order to calculate the IFO Business Climate Index, the Balance is normalized to the average of a base year, which currently is 2005.
The IFO Business Climate Index is comprised by two equally-weighted sub-indexes – a gauge of expectations and a gauge of current assessment. The IFO expectations index probably dropped to 98.4 in October from 99.3 in September, as the latter has been the lowest since December 2012. The IFO current assessment index probably slid to 109.5 in the current month from 110.5 in September. If so, this would be the lowest index level since June 2013. In case any of the gauges registered a larger than projected decline, this might have a bearish effect on the common currency.
The CESifo Group is to release the official numbers at 9:00 GMT on Monday.
United States
Services PMI by Markit – preliminary estimate
Activity in the US sector of services probably slowed down in October, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 57.0. If so, this would be the lowest index reading since April, when the final value was reported at 55.0. In September the final seasonally adjusted PMI stood at 58.9, up from a preliminary value of 58.5. Values above the key level of 50.0 indicate optimism (expanding activity). Lower than expected PMI readings would mount selling pressure on the US dollar. The preliminary data by Markit Economics is due out at 13:45 GMT.
Pending home sales
The index of pending home sales in the United States probably rose 0.3% during September compared to August, according to expectations. In August compared to July sales dropped 1.0%.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator, the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
Although there are some cancellations, there are not enough for the data to be skewed one way or another. The base value of the index is equal to 100, while the base year is 2001, when there has been a high level of home sales.
The National Association of Realtor’s (NAR) will release the official sales data at 14:00 GMT on Monday. In case pending home sales increased more than anticipated, this would have a bullish effect on the greenback.
Ebola fears
In New York City a doctor has tested positive for Ebola, after his return from aid work in West Africa. The doctor, Craig Spencer, aged 33, is being treated in an isolation unit at Bellevue Hospital Center in Manhattan, Bloomberg reported on Friday. Spencer is the second person, diagnosed with Ebola in the United States, after arriving from West Africa, where the virus has infected over 10 000 people and caused the death of about half of them. Thomas Eric Duncan passed away from the disease in a hospital in Dallas, after infecting two nurses who remain hospitalized, according to the same media.
Concerns over a potential pandemic boosted demand for haven assets such as the Japanese yen on Friday, as the disease may hinder global economic growth.
USD/JPY lost 0.10% on Friday to close at 108.16. Its weekly gain was 1.20%.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2666. In case EUR/USD manages to breach the first resistance level at 1.2700, it will probably continue up to test 1.2728. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2762.
If EUR/USD manages to breach the first key support at 1.2638, it will probably continue to slide and test 1.2604. With this second key support broken, the movement to the downside will probably continue to 1.2576.
The mid-Pivot levels for Monday are as follows: M1 – 1.2590, M2 – 1.2621, M3 – 1.2652, M4 – 1.2683, M5 – 1.2714, M6 – 1.2745.
In weekly terms, the central pivot point is at 1.2707. The three key resistance levels are as follows: R1 – 1.2803, R2 – 1.2934, R3 – 1.3030. The three key support levels are: S1 – 1.2576, S2 – 1.2480, S3 – 1.2349.
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