The final data on PMIs in Europe turned out to be slightly better than the preliminary estimate. In particular, the index of business activity in the service sector, which was supposed to grow from 50.5 points to 55.1 points, rose to 55.2 points. The composite business activity index rose from 53.8 points to 57.1 points, while the forecast was 56.9 points. However, no serious reaction followed. More precisely, the market simply ignored this data. This is partly due to the fact that after the publication of the index of business activity in the manufacturing sector, just such results were expected.
Composite PMI (Europe):
But by and large, the absence of any reaction is due to the fact that the market was waiting for data on employment in the United States, after the publication of which, the single European currency began to rapidly lose its positions. After all, this very employment increased by 978 thousand. And not only is it more than forecasted, and an increase in employment was expected by 600 thousand, but it is also the strongest growth in employment in eleven months. It is clear that in the run-up to the publication of the report of the United States Department of Labor, such data gave the dollar a fair amount of optimism. And the effect was so strong that it made it possible for us to simply ignore the data on applications for unemployment benefits, which turned out to be worse than forecasted. And if the number of initial applications decreased not by 5 thousand, but by 20 thousand, then with repeated applications everything is pretty bad. They were supposed to decline by 22 thousand, but instead grew by 169 thousand. But the strongest growth in employment made it possible to simply ignore it. In addition, the index of business activity in the service sector rose from 64.7 points to 70.4 points, while the forecast was 70.1 points. The composite business activity index, which was supposed to rise from 63.5 points to 68.1 points, rose to 68.7 points. So, it is not surprising that the dollar was growing steadily against the single European currency.
Employment Change (United States):
Today, Europe is releasing retail sales data that will probably go unnoticed. And it's not just the report of the United States Department of Labor, the publication of which the market is waiting for. The point is that the data must be inadequate. Retail sales growth may accelerate from 12.0% to 21.0%. Such impressive values are possible only because of the low base effect, which distorts the real picture. So, it is simply impossible to draw any conclusions based on such data. Investors can only wait for the statistics to clear of the low base effect.
Retail Sales (Europe):
If we look at the forecasts, the report of the United States Department of Labor should reflect both the decrease in the unemployment rate, from 6.1% to 6.0%, and the fact that 610 thousand new jobs were created outside agriculture. In theory, these are pretty good results, and the dollar should continue to grow. However, it is worth paying attention to the scale of its growth over the previous day. In general, strong employment growth has already convinced everyone that the content of the report will be much better than forecasted, and this confidence is embedded in the value of the dollar. In other words, if the data coincide with the existing forecasts, then from the point of view of the market, this is a bad result, and we will rather see the growth of the single European currency. Of course, it will not cover yesterday's decline, but still. The dollar can continue to rise only if the content of the Labor Department report turns out to be better than existing forecasts.
Number of new jobs created outside agriculture (United States):
During the last trading day, the EUR/USD currency pair showed rather high activity, as a result of which the euro rate weakened by about 90 points. Such a strong downward trend led to the breakout of the 1.2160 pivot area, signaling a change in trading interest within 2.5 weeks.
Market dynamics show signs of acceleration, where speculative excitement is visible to the naked eye.
If we proceed from the current location of the quote, sellers have already managed to overcome the local minimum of May 28 - 1.2132, without reducing the downward activity.
In this situation, a slight oversold is already observed, which can lead to stagnation / rollback, but if the price is kept below 1.2100 for a four-hour period, further moves in the direction of 1.2050 are not excluded.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments on the minute and hour periods have a sell signal due to an intensive downward movement.