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European and US summary

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EUR & GBP Buoyed

Thu, Oct 22 2009, 22:00 GMT
by Korman Tam

Forexnews.com

10/22/2009 2:30 PM: EUR/$..1.5023 $/JPY..91.28 GBP/$..1.6620 $/CHF..1.0049 AUD/$..0.9264 $/CAD..1.0478

EUR & GBP Buoyed

The dollar relinquished its earlier gains against the majors, slipping back beneath the1.50-level versus the euro and remaining mired past the 1.66-handle against the British pound. The Dow Jones and S&P 500 were higher on the session, while crude oil held steady above the $80 per barrel mark. The initial catalyst for the greenback’s reprieve was speculation overnight that China would soon mitigate its economic stimulus packages, tempering the shift to riskier assets.

There was a barrage of G7 economic reports released on Thursday. The US data included weekly jobless claims, the September leading economic indicators index and August monthly home prices. Weekly jobless claims unexpectedly crept higher to 531k from an upwardly revised 520k in the previous week. The August monthly home price index revealed further declines, down 0.3% versus a 0.3% increase in July and lower by 3.6% compared with a year earlier at -4.2%. Lastly, the September leading economic indicators index beat consensus estimates, climbing to 1.0% from a downwardly revised 0.4% from August.
 
Euro Firms above 1.50

The euro dipped briefly in London trading to 1.4945 before recovering back above the 1.50-level. Sentiment continues to be bullish for the euro if it can continue to trade above the 1.50-handle. The next key level for the EURUSD pair stands around the 1.53-mark, the neckline region for last year’s triple top formation from March to August 2008.

In the coming session, traders will look ahead to several key reports, including Germany’s October manufacturing PMI, Germany October Ifo sentiment survey, Eurozone October manufacturing PMI and August industrial orders. The data released overnight saw the Eurozone trade balance post a deficit of 1.3 billion euros in August, versus a surplus of 6.6 billion euros from July.

EURUSD will encounter interim resistance at 1.5040, followed by 1.5070 and 1.51. Subsequent ceilings are eyed at 1.5130, backed by 1.5165 and 1.52. On the downside, support starts at 1.50, followed by 1.4970 and 1.4945. Additional losses will be tempered at 1.49, followed by 1.4860 and 1.4820.

GBP Regains Footing

The sterling fell beneath the 1.65-level overnight to 1.6489, but has since regained its footing back above the 1.66-handle. Data revealed disappointing UK retail sales figures for September, printing flat on a monthly basis and missing estimates for an increase of 0.5%, while falling short of consensus forecasts for an improvement to 2.8%, instead edging up by 2.4% from 2.1% a year earlier. Traders will look ahead to Q3 UK preliminary GDP, seen posting a 4.6% contraction, improving somewhat from a 5.5% contraction a year prior.

Published on  Thu, Oct 22 2009, 22:02 GMT