The euro has inched lower in the Wednesday session. Currently, EUR/USD is trading at 1.1814, down 0.10% on the day. On the release front, German Factory Orders gained 0.5%, above the estimate of -0.2%. There was more positive news, as Eurozone Retail PMI improved to 52.4 points in November, its highest level since June. In the US, today’s highlight is ADP Nonfarm Employment Change, which is expected to slow to 189 thousand. On Thursday, German releases Industrial Production and ECB President Mario Draghi holds a press conference hosted by the ECB. The US will release unemployment claims.
The eurozone has enjoyed a strong 2017, marked by steady growth and lower unemployment. The ECB has projected GDP of 2.2% in 2017 and inflation of 1.2%. Things are so good that the ECB finally acted and tapered its asset purchase program, although it did extend the program until September 2018. Still, the cautious ECB said on Wednesday that it was concerned about increased risk-taking behavior in global financial markets” as this could lead to sharp asset price corrections. The ECB is also keeping its eye on political uncertainty in Europe, notably the deadlocked Brexit negotiations and the political vacuum in Germany. In the meantime, European stock markets remain at high levels and the euro is enjoying the view from the 1.18 level.
Will we see a slowdown in the US labor market? The markets are predicting that ADP Nonfarm Employment Change will slow to 189 thousand, compared to 235 thousand in the previous release. Investors are, of course, much more interested in the official nonfarm employment change release on Friday. The key release is expected to slow to 200 thousand, down from 261 thousand in the previous release. If nonfarm payrolls is weaker than expected, the dollar could lose ground against the euro and other rivals.
