Euro smacked lower as key support levels are breached

United States Dollar:

GBP/USD has trickled lower throughout the last 24 hours. It’s explained in part by the broad strength we’ve seen in the dollar recently, which comes following the release of stronger than expected US New Home Sales data yesterday, which showed that new home sales in August reached the highest annualised rate since 2008, jumping 18% to 504,000 vs. expectations for 432,000. EUR/USD also broke lower yesterday, and this sell-off has accelerated the gains we’ve seen in the USD over the last 24 hours.
In other news, the Bank of England’s Deputy Governor Minouche Shafik was interviewed by the Yorkshire Post yesterday and said “if wage increases are expected, but productivity is performing well we can wait for longer; if those wage increases are not accompanied by productivity increases, then I think we will have to move more quickly on rates because inflationary pressures will build up”. She also said that the UK’s economic recovery was encouraging but despite these fairly hawkish comments the pound continued to fall vs. the dollar overnight. GBP/USD opens at 1.6305 this after having dropped to a low of 1.6287 early this morning.
The focus for markets today will be on data from the US including Durable Goods Orders, as well as a speech by Bank of England Governor Mark Carney.

Euro:

EUR/USD fell through support levels at 1.28 yesterday, and went on to trigger stop loss orders on its way down through the 1.27’s. The weaker-than-expected German Ifo data (a business climate index) yesterday started the rot. A story in the WSJ then spooked markets a little later in the day – although, ultimately, it could turn out better for risk if it were to happen – reporting that PBOC leader Xiaochuan might be replaced. The dollar strengthened on this news, but it’s not the only reason why the dollar has strengthened; EUR/USD is busting through some solid support levels as I write. The ECB’s Mario Draghi is speaking at the moment in Lithuania and his comments aren’t doing the single currency any favours either, saying that the central bank is ready to implement additional unconventional policy instruments if the 2% inflation target is threatened. EUR/USD is now threatening a break below 1.27, having traded to a low of 1.2697 already. With this, GBP/EUR is making good gains and has pushed back through 1.28 – it sits at 1.2815 currently.

Aussie and Kiwi Dollars:

The kiwi was smacked lower overnight following comments from RBNZ’s Graeme Wheeler. He said that he welcomed the most recent decline in the value of the currency, but would like to see it fall further to more sustainable levels. He went on to say that “unjustified and unsustainable are important considerations in assessing whether exchange-rate intervention is feasible”, and this was the point at which investors unloaded kiwi dollars. NZD/USD gapped lower from .8070 to .8025 and has continued to fall heading in to the European session – it opens this morning at .7965. AUD/USD has also drifted lower, dragged lower by the fall in NZD/USD. The RBA’s Stevens was speaking overnight and referred again to the central bank’s concerns about investor housing finance growth – this weighed on the Aussie dollar a little too and the pair opens this morning at .8820.

Data releases for the next 24 hours:

AUD: No data
EUR: Italian Retail Sales m/m
GBP: CBI Realized Sales, BOE Gov Carney Speaks
NZD: No data
USD: Core Durable Goods Orders m/m, Unemployment Claims