US PAYROLLS DATA TAKE CENTRE STAGE
The economic data returns to the limelight on Wednesday, with reports on German inflation and US employment making headlines.
Action begins in Europe at 08:00 GMT with a ZEW survey on Switzerland’s business climate. A half hour later, attention shifts to the United Kingdom with reports on consumer credit, net lending to individuals and mortgage approvals.
The European Commission’s statistical agency will release a batch of sentiment indicators at 09:00 GMT. These include services sentiment, consumer confidence, industrial confidence, business climate and economic sentiment.
The biggest news release from the continent comes at 12:00 GMT when Germany’s Federal Statistical Office reports on inflation. The preliminary consumer price index (CPI) is forecast to come in at 1.8% annually in August, up slightly from 1.7% the previous month. The harmonised index of consumer prices (HICP) is forecast to come in at 1.7% year-over-year.
In North America, the ADP Research Institute will release its monthly private sector payrolls report at 12:15 GMT. The report, which is released 48 hours in advance of the official nonfarm payrolls data, is expected to show the creation of 185,000 private-sector jobs for the month of August. That follows a gain of 178,000 the previous month.
Just 15 minutes later, the US Commerce Department will release revised second quarter GDP numbers. The revised estimate is forecast to show annual growth of 2.7%, up slightly from the advance estimate of 2.6%.
Oil traders will also look for the weekly inventory report from the US Energy Information Administration (EIA). The weekly data set is forecast to show a 2.1 million-barrel drawdown in commercial crude inventories for the period ended 25 August.
The US dollar rebounded against the yen on Tuesday, but continues to move with a bearish bias. The pair was up 0.2% at 109.77 ahead of the European session after coming within a few pips of 110.00. A reversal back toward 108.60 raises the risk of a bigger downtrend. In the opposite direction, another close above the 20-day simple moving average (109.60) may draw more bidders into the mix.
The euro continued to trade near multiyear highs on Wednesday after briefly eclipsing the 1.20 barrier. Prices were up 0.1% at 1.1979 during Asian trade. The psychological 1.20 barrier continues to be the major test for the EUR/USD. On the opposite side of the ledger, immediate support is located at 1.1910 followed by 1.1848.
US crude prices have declined in back-to-back sessions, as traders assess the fallout from Hurricane Harvey. Prices were down 0.3% during the Asian session to reach $46.31 a barrel. The short-term outlook remains bearish, with the Relative Strength Index (RSI) in the low-40s and the MACD in negative territory.