There were few important releases earlier during the yesterday’s European and NY session, including the German unemployment data, Euro zone’s inflation data, US GDP figure, Canadian GDP figure and Fed interest rate decision. All these events turned out to be a game changer for the Euro and the US dollar. The highlight was that the US dollar traded lower against almost all the major currencies.
The first major economic release was the German unemployment data. The outcome was a positive one, as roughly 41.8 million persons resident in Germany were in employment according to provisional calculations of the Federal Statistical Office in March. This was an increase of 376,000, or 0.9%, from March 2013, according to the report. The Euro was seen trading a touch higher after the data release.
The second one was the Euro zone inflation report. The market waited for a long time for this report to know and analyze more about the possible policy changes from the ECB in the upcoming meeting. The outcome was slated for a 0.8% rise from 0.5% previous. However, the outcome missed the expectation, and registered a reading of 0.7%, according to a flash estimate from Eurostat, the statistical office of the European Union. The report mentioned that the services sector is expected to have the highest annual rate in April, followed by food, alcohol & tobacco.
The outcome missed the expectation, but we cannot deny the fact that there was a net rise from 0.5% to 0.7%. This might release some pressure of the ECB. The central bank now can buy some more time before introducing additional measures in the future. The EURUSD dipped after the release, but later jumped more than 50 pips to trade back above the 1.3840 level. The pair is now approaching an important trend line and resistance confluence zone at 1.3890-1.3905 area. If it breaks the mentioned level, then more gains are feasible, else the pair might fall back towards the 1.3850 support level.
Later, the US GDP data was published by the US Bureau of Economic Analysis. The market was expecting an increase of 1.2% in GDP for the US in the first quarter. However, the outcome was very disappointing as the US GDP managed only an increase of 0.1%, and the price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.4 percent in the first quarter, compared with an increase of 1.5 percent in the fourth. The US dollar buyers were shocked after the release, as the sellers took control and pushed the US dollar lower against almost all the major currencies.
Moreover, the Fed interest rate decision was also lined up. The Fed kept the interest rates unchanged, and reduced the bond buying from $55B to $45B as expected by the market. However, the US dollar was unable to capitalize after the release.
Moving ahead, we have US ISM manufacturing PMI and Janet Yellen’s speech today, followed by the US nonfarm payroll data tomorrow. All these are important and high-risk events, which can create a lot of volatility in the coming days. Remember, the market expecting a healthy NFP reading this time, and also expecting the US unemployment level to fall from 6.7% to 6.6%.
So, keep an eye on all the important events friends and trade accordingly.
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Happy Trading Friends!
