Euro Finds Feet as Data Heavy Week Commences
Major Economic Data Ahead
Key economic data looms ahead this week, including interest rate policy announcements from Australia, the UK and the eurozone. Additionally, at the end of the week we have pivotal employment data out of the US and Canada.
Euro Stabilizes From Sharp Decline
On Monday the Euro took a pause from its recent free-fall against the US Dollar. Last week the pair lost over 300 pips, sinking to a six week low amid concern over deflation in the eurozone and speculation that the ECB could cut interest rates as soon at their meeting this Thursday.
The European currency was buoyed during the London trading session on Monday by eurozone factory PMI data, as new orders increased for the fourth consecutive month.
Research group Markit reported that the eurozone’s manufacturing PMI remained unchanged at 51.3, from 51.3 in the preceding month. A reading above 50 reflects expansion in the sector while a figure below 50 indicates contraction.
Data last Thursday showed that eurozone inflation unexpectedly fell in October to 0.7 percent, a near four year low, sparking concerns that the ECB may soon cut interest rates. Meanwhile, eurozone unemployment held at a record high of 12.2 percent.
Fed's Bullard Looking for Two Percent Inflation Before Tapering
St. Louis Fed President James Bullard appeared on CNBC on Monday morning, affirming that the central bank can be patient about tapering its bond purchases.
Bullard, who voted in favor of maintaining the Fed's $85 billion per month bond buying program, said he wanted to see inflation return to the target two percent level before tapering.
US Factory Orders
The Commerce Department reported on Monday that Factory orders rose 1.7 percent in September, in line with analyst expectations.
EUR/USD Daily Chart
Looking at the EUR/USD daily chart we can see that price remains well above the 200 period simple moving average and has formed a channel.
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