EUR/USD Below 1.15 as Asia Equities Rally - Will US Extend the Move?


Market Drivers August 26, 2015
Asian bourses rally driving euro lower
Oil pops helping drive USDCAD lower
Nikkei 3.20% Europe -1.32%
Oil $39.5/bbl
Gold $1136/oz

Europe and Asia:
AUD Construction Work Done 1.6% vs. -1.5%
GBP UK BBA 46K vs. 46K

North America:
USD Durable Goods 08:30
It's been a much calmer night of trade in the currency market but equity flows continued to dominate the direction of FX as the rally in Asian bourses helped to push EUR/USD towards the 1.1450 level unwinding the risk aversion trade.

After yesterday's disappointing NY session close which saw all of the gains erased by end of day, traders in Asia were jittery and both EUR/USD and USD/JPY saw some serious volatility jumping 50 points up and down in a matter of minutes as traders prepared for the open of trade in Shanghai and Tokyo. But after an initial swoon, Asian stocks stabilized and that helped to reverse most of the risk aversion trades in FX.

By mid-morning Europe the unwind in risk aversion accelerated and EUR/USD dropped to session lows of 1.1450 as traders awaited the North American open. With no major economic events on the calendar the currency markets will continue to be driven by equity flows and the key question ahead if whether US stocks can finally stabilize after two days of massive volatility that has shaken investor sentiment to the core.

Traders in Asia appeared to be relieved by yesterday's easing moves from PBOC with most investors expecting the Chinese central bank to cut rates further before the year end in order to stimulate the Chinese economy.

The only report of note in the US session is the Durable Goods report due at 1230 GMT. The market anticipates a lower read of 0.3% from 0.6% a month ago, but unless the print is negative it's unlikely to have anything but a momentary reaction to trade. The focus will be on stocks and currency traders will be keen to see if bargain hunters will finally appear. A strong rebound in equities will likely send EUR/USD back below 1.1400 and USD/JPY above 120.00 as they try to recapture the key breakout/breakdown levels from which which they exploded at the start of this week.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD drops below 1.0800 after German Retail Sales data

EUR/USD drops below 1.0800 after German Retail Sales data

EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus. 

EUR/USD News

GBP/USD stays weak near 1.2600 amid market caution

GBP/USD stays weak near 1.2600 amid market caution

GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull. 

GBP/USD News

Gold price holds strength ahead of US core PCE inflation

Gold price holds strength ahead of US core PCE inflation

Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday. 

Gold News

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC

XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase. 

Read more

Portfolio rebalancing and reflation trades emerge into Q2

Portfolio rebalancing and reflation trades emerge into Q2

Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.

Read more

Majors

Cryptocurrencies

Signatures