Euro to dollar fundamental news is dominated this week by the ECB rate decision and Friday’s non farm payroll.  Before either of these momentous events the markets will have to plough their way through a veritable raft of releases which began earlier this morning with the final manufacturing PMI data for Europe which came in ahead of expectation at 52.4 against a forecast of 52 which as a result helped to give the euro a small lift in currency trading this morning.  The euro to dollar is now waiting for the US session in which the key release is the ISM manufacturing figure which is forecast to show a modest improvement over last month’s figure at 55.5 against a previous of 54.9.  The ISM is a diffusion index and is based on a survey of purchasing managers in manufacturing industries with a figure of above 50 indicative of an expanding market.  This number is generally considered to be leading indicator and should the actual be better than forecast then this should be good news for the euro to dollar.

Tuesday’s fundamental news for the euro to dollar pair starts early with the release of German retail sales (Europe’s largest economy) which is forecast to show a healthy improvement over last month’s poor -1.7% to an improving 0.9%.  Should the number come in better than forecast then this should help to lift the euro in the London trading session.  Later in the morning we have the PPI data but this tends to have a relatively muted effect on the market since Germany and France release their own figures.  The forecast for this is a flat 0%, virtually unchanged since the last time at 0.1%.  Tuesday’s afternoon session for the euro to dollar will see the pending home sales in the US which measure the number of homes sold, but awaiting completion.  The number forecast is significantly better than previous at 0% with last month’s figures a dreary -16%, once again adding the good news pipeline for the US dollar.   This figure is, once again, considered to be a leading indicator and there can have a significant impact on the euro to dollar pair, with a better number having a positive effect on the US currency.

Wednesday’s fundamental news in Europe is relatively minor with final services PMI data due up first followed by retail sales later in the morning with the latter forecast to show an improvement from the last time, up from -1.2% to +0.4%.  This will, now doubt add further to the good news stories on both sides of the Atlantic adding to the tussle  between the euro and the US dollar.   Attention in the afternoon then switches to the US and concentrates on 2 key releases:  the first of which is the ADP non farm numbers followed by the ISM non manufacturing PMI.  The first of these generally provides an excellent guide to the non farm payroll numbers due for release 2 days later as they are based on actual payroll changes therefore being a good predictor of Friday’s number.  The forecast is for an improving picture with a figure of -36k against a previous of -84k.  Any improvement is likely to prove positive for the US.  Two hours later we have the second “red flag” number, with the ISM data also forecast to show an improvement from 49.8 to 51.2 this time crossing the 50 threshold which indicates an economy in expansion.  Once again if the actual is better than forecast the dollar could strengthen further as a result.  Final data for Wednesday is the weekly release of crude oil inventories which represents the change in the number of barrels of crude oil held in inventory at Cushing.

Thursday sees the ECB rate decision followed 45 minutes later by the press conference and, as usual, it will be the statement itself followed by a question and answer session which will be the focus for the market rather than the rate itself which are expected to remain unchanged at 1%.  The principal US number is the afternoon is the weekly unemployment claims data forecast at 461k, little changed from last week’s 470k.

Friday is all about non farm payroll and with little in Europe it is this item of fundamental news that will preoccupy all the markets throughout the day.  The forecast is for a positive figure of 13k which was forecast last month but failed to deliver at -85k and if achieved will be the first time in 2 years and we could see a resultant surge in the US dollar.  The unemployment is expected to remain flat at 10%.  Finally the week rounds off with the start of another G7 circus which is due to take place in Canada.

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