Yesterday’s trade saw EUR/USD within the range of 1.0716-1.0793. The pair closed at 1.0752, up 0.21% on a daily basis. The daily low was a higher-low test of the low from Friday, while the latter has been the lowest level since April 23rd.
At 7:13 GMT today EUR/USD was down 0.07% for the day to trade at 1.0744. The pair touched a daily low at 1.0737 at 5:15 GMT, overshooting the daily R2 level.
Today EUR/USD trading may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
Italian Industrial Production
Annualized industrial production in Italy probably expanded 1.3% in September, according to the median forecast by experts, following another 1.0% increase in August. If so, it would be the third consecutive month of expansion. At the same time, seasonally adjusted index of industrial production probably rose 0.5% in September compared to August, following a 0.5% drop in the prior month. The index reflects the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case annual output increased at a faster rate than anticipated, this would have a limited bullish effect on the common currency, as it would suggest inflationary pressure build-up. The National Institute of Statistics (Istat) is to release the official industrial data at 9:00 GMT.
United States
Export and import prices
Prices of imported goods in the United States probably fell for a fifth consecutive month in October, dipping at a monthly rate of 0.1%, according to market expectations. In September import prices were 0.1% lower from a month ago, driven by lower non-fuel prices. In annual terms, prices were 10.7% lower in September, which has been the 14th consecutive month of decline. Generally, lower import prices of goods suggest lower rates of consumer inflation and a lesser probability of a rate hike.
Prices of exported goods from the United States probably decreased for a fifth consecutive month in October, going down at a monthly rate of 0.1%. In September export prices were 0.7% lower from a month ago, as agricultural prices went down 1.1%, while prices of non-agricultural goods fell 0.6%. In annual terms, export prices slumped 7.4% in September, or for a 13th month in a row. Lower prices of exported goods generally bolster demand abroad, and as US trade accounts for 20% of international trade relations, this also tends to be dollar positive.
The Department of Labor is expected to release the official numbers at 13:30 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.276% on November 9th, or the highest level since October 22nd (-0.252%), after which it slid to -0.334% at the close to lose 5.1 basis points (0.051 percentage point) in comparison with November 6th. It has been the first drop in the past three trading days.
The yield on US 2-year government bonds climbed as high as 0.910% on November 9th, after which it closed at 0.890% to remain unchanged compared to November 6th.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, widened to 1.224% on November 9th from 1.173% on November 6th. The November 9th yield spread has been the largest one in more than seven months.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.725% on November 9th, or the highest level since September 17th (0.791%), after which it slid to 0.667% at the close to lose 3 basis points (0.03 percentage point) compared to November 6th. It has been the first drop in the past six trading days.
The yield on US 10-year government bonds climbed as high as 2.377% on November 9th, or the highest level since July 21st (2.403%), after which it slipped to 2.345% at the close to add 2 basis points (0.02 percentage point) compared to November 6th, while marking a sixth consecutive trading day of gains.
The spread between 10-year US and 10-year German bond yields widened to 1.678% on November 9th from 1.628% on November 6th. The November 9th yield difference has been the largest one in at least seven months.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.0759
R2 – 1.0766
R3 (range resistance) – 1.0773
R4 (range breakout) – 1.0795
S1 – 1.0745
S2 – 1.0738
S3 (range support) – 1.0731
S4 (range breakout) – 1.0710
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.0834
R1 – 1.0961
R2 – 1.1182
R3 – 1.1309
S1 – 1.0613
S2 – 1.0486
S3 – 1.0265
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