Yesterday EUR/USD was able to partially restore its position on the background of the weaker USD dollar, whose index fell by 0.55% on Thursday.
In connection with New Year holidays this week in Europe there were no important economic statistics, EUR/USD trading dynamics was primarily dependent on the change in the level of demand for the US currency. The dollar suffered losses yesterday after the publication of a report on production activity. Economic sentiment in the American manufacturing sector has deteriorated sharply. US manufacturing sector PMI unexpectedly fell from 59.3 points to 54.1 points in a month (the lowest value since December 2016), while investors expected a decline to 57.7 points. Weaker domestic statistics led to lower expectations regarding the possibility of continuing the US rate increase policy.
In addition to the PMI data, a report from ADP on the change in the number of people employed in the non-agricultural sector was published yesterday in the United States, which largely shaped investors' expectations regarding the main report from the Department of Labor, which will be published today. An impressive gain in the number of people employed, according to ADP, significantly increases the likelihood of the publication of stronger employment data today, so for the dollar the situation is still stalemate, despite yesterday’s decline, and in the case of the publication of stronger employment data and average wage return from decline to growth.
In the light of recent events related to the sharply increased volatility in the stock markets, a speech by Fed Chairman Jerome Powell can have a very strong influence on trading today.
A large block of important statistics will also be published in Europe today. Investors' attention may attract a report on the labor market in Germany, PMI services sector, as well as preliminary data on inflation. The day promises to be interesting and volatile.