|EUR/USD previous four days:||Rate – Average|
The euro grinded slowly higher versus the US dollar across the previous session. The euro US dollar exchange rate pushed above the key level of US$1.11 on Thursday, closing near the session high at US$1.1104. The pair gave up early gains on Friday, although was still managing to hold US$1.11.
The euro slipped in early trade following the release of German industrial production figures. Industrial production in Europe’s largest economy sank -1.7% month on month in October. This was significantly worse than the 0.1% increase than analysts had forecast. This was the second consecutive month of declines and the steepest fall since April. The data reminded investors of the fragility of the German manufacturing sector, which has been in a downturn for around a year amid Brexit and the ongoing US — China trade dispute.
This latest show of weakness in Germany will no doubt feed into discussions at the European Central Bank monetary policy meeting next week.
Will NFP Drag Dollar Lower?
Despite broadly better than forecast US data in the previous session, the dollar drifted lower. Investors continued to weigh up mixed trade messages whilst looking ahead to today’s non-farm payroll release.
The US Labour Department’s jobs report, also known as the non-farm payroll report, is the most keenly awaited data release across the month. It is the most complete labour sector write up by the Federal government. It is also closely watched by the Federal Reserve given that their dual mandate includes maximum employment.
Analysts are expecting a headline figure of 180,000 jobs, above the 128,000 created in October. However, it is worth pointing out that leading indicators have not been impressive. The ADP private payroll report surprised to the downside. The employment components in the ISM non-manufacturing and manufacturing reports also declined in November. Combing these lead indicators suggests that today’s non-farm payroll job creation figure could disappoint.
The report is also expected to show that the rate of unemployment held steady at 3.6% in November, whilst wages ticked higher to 0.3%, up from 0.2%. A weak report could drag the dollar lower.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 EUR = 1.12829 USD
Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.
Or, if you were looking at it the other way around:
1 USD = 0.88789 EUR
In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar.