Falling Nonfarm Payrolls Fail to Support EUR/USD

Nonfarm payrolls is one of the most important indicators of the U.S. economy’s health. Market analysts expected it to grow up in January by 50,000. But in reality it didn’t grow at all, instead it dropped by 17,000. At first, this fueled dollar bears’ activity and drove EUR/USD up close to the historical borders, but then, after release of some other important indicators, it went down to about 1.4800.

The part of the employment report was the U.S. unemployment rate in January — it fell down from 5.0% to 4.9%.

Construction spendings in December fell down by 1.1%, faster than the analysts expected (0.5% drop).

Non-manufacturing ISM report on business activity in January resulted in PMI at 50.7%, showing an increase from the last month’s 48.4% and that it’s significantly better than the forecasted 47.5%.

Index of Consumer Confidence, reported by Reuters and University of Michigan, fell to 78.4 in January from 80.5 in December. Expected value for this indicator was 79.0.

Another Day of Weak U.S. Statistics

Euro tried to regain some of its strong positions against U.S. dollar today after some new weak economical statistics regarding personal income and spendings were released to the financial market traders. But after construction spending and very optimistic PMI reports were released dollar started to press on euro and EUR/USD returned to its daily open value.

The most notable are the personal income and personal consumption expenditures (PCE) data reported by U.S. Bureau of Economic Analysis - in October they both rose by 0.2% while markets were expecting 0.4% growth in personal income (same as in September) and 0.2% for PCE.

Chicago PMI report (Business Barometer) showed an increase of this index above the average expectations by the analysts. It was at 52.9 in November, while 50.5 was expected it was 49.7 in October.

Total housing construction spending in October 2007 decreased by 0.8% (seasonally adjusted) compared to September's value, that's below pessimistic expectations of 0.3% drop. Real estate sector of the U.S. economy is heading into a deep crisis and new data reports prove that easily.

Euro Recovers Against USD After ISM PMI and Construction Spending

EUR/USD regained part of its losses, received earlier this day and yesterday, after some important but not encouraging data from United States. EUR/USD is still in the flat zone (speaking in long terms), but some strong intraday volatility hints for possible breakout with the direction still unknown.

PMI index by Institute for Supply Management (ISM) was reported today and came out by 0.1 point lower than expected decrease from 53.8 to 53.0 - at 52.9 level. This can hint for a probably weak position of the U.S. manufacturing sector, which will show itself in the later months.

Construction spending in July fell by 0.4% compared to the June amounts. It was much worse than the expected 0.1% fall. So the crisis in the real estate sector continues in time and strengthens in powers without any signs of recovering with all those money interventions by Fed.

EUR/USD Can't Stay Above 1.3700

After breaking back above the 1.3700 mark EUR/USD fell below this level as the economic releases on inflation and consumer confidence were released today. Struggling below this level, if continued, may precede the new bearish trend in EUR/USD, while rallying and staying above will mean a return to a long-lasting EUR/USD bull trend.
Personal income and spending June numbers came out today close to the predicted values - 0.4% to 0.5% and 0.1% to 0.1% respectively. Core PCE inflation came out at 0.1% level - below the 0.2% predicted. This means that the inflation indicators are not high yet.
Chicago PMI - a major manufacturing index for the North-West region - decreased significantly from 60.2 to 53.4, while 58.5 was expected.
Construction spending numbers continue to warn the market about the crisis in realty sector showing a decrease of -0.3%, while analysts expected 0.2% growth.
Consumer confidence - the main surprise of a day which kept dollar below 1.3700 and stock markets high - came out at the 112.6 level (far above 105.4 expected) - at its highest value since 2001.