EUR/USD is steady on Thursday, after posting six losing sessions. Currently, the pair is trading at 1.1503, up 0.21% on the day. On the release front, there are no major German or eurozone events on the schedule. In the U.S, the key event is unemployment claims, which is expected to remain unchanged at 214 thousand. On Friday, Germany releases Factory Orders and PPI. In the U.S, the focus will be on key employment data, with the release of nonfarm payrolls, wage growth and the unemployment rate.
The euro continues to struggle, having declined 2.2% since September 26. A key factor in the current slide is the Italian budget, which the populist government tabled last week. The budget increases spending, lowers taxes and sets the budget deficit at 2.4% of GDP for 2019. Italy has a massive debt, and the European Union doesn’t want Rome to expand the current deficit, which stands at 1.6% of GDP. The populist Italian government appeared to backtrack on Wednesday, and has now said that the budget deficit could be lowered in 2020 and 2021. Still, the budget remains a sore point for the EU, and the euro could lose ground if the EU and Italy remain at loggerheads over Italy’s fiscal policy. The budget must first be approved by Italy’s parliament and then by the European Commission, so this saga is likely to continue for some time.
U.S employment numbers kicked off on a high note, as ADP nonfarm payrolls jumped 230 thousand in September. This marked the strongest increase in private sector jobs since March. The red-hot labor market will have to ease sometime, and the markets are braced for some soft numbers on Friday. Wage growth is expected to drop from 0.4% to 0.3%, while nonfarm payrolls is forecast to fall from 201 thousand to 185 thousand. Traders should be prepared for some movement in the currency markets during Friday’s North American session.
