The euro remained range-bound against the greenback despite the release of better than anticipated German trade surplus data for July. The robust US non-farm employment change data and hawkish stance of the US Fed continue to keep the greenback bullish against its peers, including the euro. Overall, the EUR/USD pair recorded a high and low of 1.0033 and 0.9958, respectively.
According to the data published by the German statistical organization Destatis, the country’s trade surplus declined to €4.90 billion in July from €7.696 billion in the prior month. The market was expecting a trade surplus of €6.20 billion.
According to Eurostat, the producer price index (PPI) rose by 4% m-o-m in July, following a 1.30% increase in the prior month and greater than the 2.5% growth anticipated by economists.
The increase was mainly led by a 9% rise in the energy sector, a 1.20% increase in non-durable consumer goods, 0.90% growth in durable consumer goods, and a 0.80% rise in capital goods.
On a year-on-year basis, industrial producer prices surged 37.90% in July 2022. In particular, the energy sector recorded a jump of 97.20%, while intermediate goods posted a rise of 21.60%. Non-durable consumer goods recorded a rise of 13.80%. Durable consumer goods posted an increase of 9.80%. Capital goods recorded an increase of 7.90%. Excluding energy, the PPI grew by 15.10%.
According to the US Bureau of Labor Statistics, the country’s non-farm payrolls rose by 315,000 in August, following an addition of 526,000 jobs in the prior month, and higher than the 295,000 job additions anticipated by economists.
At the end of August, aggregate non-farm employment stood at 240,000 higher than its pre-pandemic February 2020 level.
Professional and business services added 68,000 jobs, while the healthcare sector recorded an addition of 48,000 jobs. The retail trade recorded 44,000 job additions in August. On a y-o-y basis, retail trade added 422,000 jobs in August 2022.
Employment in the manufacturing sector increased by 22,000 in August. Likewise, the financial sector added 17,000 jobs. Wholesale trading added 15,000 jobs and reached the pre-COVID-19 February 2020 level.
Notably, mining employment grew by 6,000. However, employment in leisure and hospitality recorded an increase of only 31,000, following average monthly gains of 90,000 in the initial seven months of 2022.
The US unemployment rate inched up to 3.70% in August, from 3.50% in July. Economists did not anticipate any change in the unemployment rate. The number of unemployed people rose by 344,000 to 6 million.
The count of permanent job losers rose by 188,000 to 1.40 million in August. Also, the labor force participation rate rose by 0.30% to 62.40%, but remains 1% below its pre-pandemic February 2020 level.
The statistical organization also stated that the average hourly earnings of private non-farm payrolls grew by 0.30% (or $0.10) in August to $32.36. This compares with a 0.50% rise in July and is a notch lower than the 0.40% increase anticipated by economists. On a year-over-year basis, average hourly earnings increased 5.20%.
The solid economic data from Europe and the mixed economic data from the US, coupled with the hawkish stance of the Fed, is expected to keep the EUR/USD pair range-bound with a slight bearish bias in the short term.
The historical price chart indicates that the EUR/USD pair is descending after failing another attempt to break the resistance at 1.0010. The currency pair is trading below its 50-day moving average while the momentum indicator is on a downtrend. Therefore, we are anticipating the currency pair to remain in a downtrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
