EUR/USD Daily Technical Analysis for August 9, 2017

 

Stronger than expected U.S. data pushed U.S. yields higher, which helped buoy the dollar, as it pushed the interest rate differential in favor of the greenback.  Today’s U.S. JOLTs report showed a record number of Jobs openings in the United States, which confirmed the better than expected jobs report released last Friday. U.S. small business optimism rose in July to the highest reading since February of 2017. German exports and imports slumped, which also took some of the luster off the Euro.

Technicals

The EUR/USD reversed Monday’s gains sliding through support which is now resistance at the 10-day moving average at 1.1785.  Support on the currency pair is now seen near the 50-day moving average at 1.1428.  Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. The MACD histogram is printing near the zero-index level with a flat trajectory which reflects consolidation.

JOLT’s Report Hits Record

Today’s U.S. JOLTS report showed that the number of openings grew to 6.2 million on the last day of June 2017, a record high, according to the Labor Department. This represents an increase from 5.7 million on the last business day of May. The June number is the highest reported since the Labor Department began tracking the series in December 2000. The previous monthly job openings record was set in July 2015. For the month of June, the Labor Department reported hires and separations were little changed at 5.4 million and 5.2 million, respectively. Job openings grew in June most notably across professional and business services by 179,000, with health care and construction industries increasing the second and third most at 125,000 and 62,000, respectively.

Business Optimism Soared

U.S. NFIB small business optimism index rose 1.5 points to 105.2 in July, rebounding from June’s 0.9 point drop to 103.6. This is the highest reading since hitting 105.3 in February. The percentage of firms planning to hire rose to 19% from 15% previously, and those anticipating a better economy improved to 37% from 33%. with those seeing a good time to expand at 23% from 21%. Those seeing higher selling prices jumped to 8% from 1%. Plans to increase capital spending dipped to 28% from 30%. The data are a little better than expected, as has been the case for several other July sentiment readings.

Consumer Credit Rose

U.S. consumer credit rose $12.4 billion in June following the $18.3 billion May increase which was revised from $28.4 billion. Non-revolving credit increased $8.3 billion, continuing to lead the strength in consumer borrowing, after the $11.4 billion jump in May which was revised from $11.0 billion. Revolving credit was up $4.1 billion versus the prior $6.9 billion gain which was revised from $7.4 billion. Credit slowed a bit in Q2, rising $42.9 billion, after the $447.1 billion Q1 increase.

German Exports Dropped

German exports slump in June, but trade surplus improves. German export and import growth disappointed, with exports falling -2.8% month over month and imports -4.5% month over month. The trade surplus though improved to EUR 21.2 billion from EUR 20.3 billion, leaving the total for the second quarter at EUR 61.3 billion, up from EUR 59.9 billion in the first quarter of the year. Like yesterday’s production numbers then the data point to a robust Q2 GDP growth rate, with net exports underpinning the German recovery, which orders suggest remains on track in the third quarter, even if automaker’s woes and the strong EUR are seeing investors turning cautious on German stocks.

UK Retails Sales Were Strong in July

UK retail sales were strong in July, according to the British Retail Consortium, which reported a 0.9% year over year rise in its headline like-for-like measure of activity. The median forecast had been for 0.6% growth, while strength was somewhat masked in the headline figure by the fact that July sales in the previous year were strong. The breakdown showed that food sales drove the gain, with non-food sales decreasing by 0.7% on the like-for-like basis in the three-months to July. The BRC expressed some caution, noting a “shrinking pool of discretionary consumer spending power,” highlighting the negative real income trend, which was mentioned as a concern in the BoE’s guidance last week.