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The euro's recovery has just begun to show signs of being "strangled by data"! 1.1500 mark hangs on a thread
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Hello everyone, today XM Forex will bring you "[XM official website]: The euro's recovery has just begun to show signs of "data strangulation"! The 1.1500 mark hangs on a thread." Hope this helps you! The original content is as follows:
On Friday (November 21) during the Asia-Europe period, the euro rose slightly against the US dollar and then fell back. After the negative US non-farm payrolls release last night, the euro gained a breathing space. Today, the euro rebounded slightly during the Asian market. However, with the release of manufacturing PMI data from the Eurozone and many European countries, the three major European stock indexes fell collectively. At the same time, the euro fell sharply against the US dollar, falling nearly 40 points from the high of 1.1551. It turned from rising to falling and closed with a long upper shadow line. It is currently trading around 1.1514.
Preliminary business activity data released by the Eurozone and Germany were significantly lower than market expectations, frustrating investor sentiment and directly suppressing the euro's rebound momentum.
Both Eurozone PMIs fell short of expectations, indicating lack of motivation for economic recovery
The Eurozone HCOB manufacturing PMI fell from 50.0 in October to 49.7 in November, officially falling into the contraction range, while the market had generally expected the index to rebound to 50.2;
The service PMI also fell short of expectations, falling slightly to 52.4 from the expected flat 52.5, indicating a lack of motivation for the Eurozone's economic recovery. German economic data performed even weaker, with the manufacturing PMI in November further falling to 48.4 from 49.6 in October, deepening the contraction;
The service PMI fell sharply from 54.6 to 52.7, far below market expectations of 53.9, reflecting the continued slowdown in Germany's growth momentum as the economic engine of the euro zone.
The U.S. dollar’s strong performance is stable, and policy expectations support the exchange rate
Looking at the U.S. dollar, it has maintained a strong pattern this week. The core logic is that investors gradually revise their views on the Fed’s policy path.expectations - the market realizes that it may take longer for the Fed to initiate the next round of easing cycle.
The minutes of the October FOMC meeting showed that there were significant differences among policymakers on the trend of inflation and the pace of interest rate hikes, while the much-anticipated non-farm payroll data in September showed that unemployment increased and hiring decreased, but wage increases remained unchanged.
It paints a picture of declining employment quality. At the same time, the seasonal elasticity factor in new employment has the highest contribution to employment growth in history, and its credibility is questionable. xmniubi.combined with the increase in the unemployment rate and recent labor market data provided by the private sector.
The interpretation of non-agricultural data has strengthened expectations for a deterioration in the labor market in the future, and has not provided clear guidance for the resolution of the December meeting, further exacerbating the market's wait-and-see mood.
Focus of the day: Central bank officials speak out intensively, US data provides guidance
Later today, the three major European Central Bank officials Luis de Guindos, Joachim Nagel and José Luis Escriva will give public speeches one after another. Their statements on inflation and monetary policy in the euro zone may trigger short-term fluctuations in the euro.
In the U.S. session, S&P Global’s preliminary PMI, the University of Michigan Consumer Confidence Index in November, and speeches by several Federal Reserve officials will become the core fundamental factors guiding the short-term direction of the U.S. dollar.
Supplementary market information
The downside of the US dollar continues to be limited, investors continue to lower the pricing probability of the Federal Reserve's interest rate cut in December, and the weak performance of business activity data in Germany and the Eurozone has caused a substantial setback in the euro's rebound attempt.
Early this morning, Christine Lagarde, President of the European Central Bank, made it clear that a stronger euro may lead to a larger-than-expected decline in inflation. The European Central Bank will remain highly vigilant and will be ready to adjust its monetary policy stance at any time if there are major changes in inflation or the economic situation.
In terms of U.S. economic data, the S&P Global Preliminary Manufacturing PMI is expected to slow to 52.0 in November from 52.5 in October, while the services PMI is expected to remain in the expansion range of 54.8; The University of Michigan consumer confidence index is expected to recover moderately from 50.3 in October to 50.5. Consumer inflation expectations are stable at 4.7% in the next 12 months and 3.6% in the next five years, the same as last month, indicating that U.S. inflation expectations are still sticky.
The U.S. non-farm payrolls report for September released on Thursday showed a "mixed" pattern: 119,000 new jobs were created, significantly exceeding market expectations of 50,000. However, the August data was revised down from an increase of 22,000 to a decrease of 4,000. What is more noteworthy is that the unemployment rate unexpectedly rose from 4.3% to 4.4%. This differentiated data suppressed the market's bets on further interest rate hikes by the Federal Reserve, and also caused the US dollar to fail to achieve a breakthrough rise with the help of non-farm data.
In the Eurozone, the European xmniubi.commission’s preliminary consumer confidence index remained at -14.2 in November, failing to improve to -14.0 as market expectations, reflecting thePeople in the region are still worried about the economic outlook, further confirming the fragility of the euro zone's economic recovery.
Technical analysis:
EUR/USD has broken out of the standard decline pattern of falling below the bullish pattern and rebounding without crossing the neckline. At the same time, the deterioration of economic data has increased the credibility of the bearish pattern.
At present, the exchange rate barely holds the 1.1500 integer mark, with pressure around the 5-day line of 1.1550 and support around 1.1500, 1.1468 and 1.1400.
The above content is all about "[XM official website]: The euro's recovery has just begun to show signs of being "strangled by data"! The 1.1500 mark is hanging by a thread". It is carefully xmniubi.compiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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