Thursday, August 16, 2012

EUR/USD pressing the downside sub-1.23 following bad Chinese data



EUR/USD is currently at 1.2281, barely below Asia-Pacific open price, retracing from session highs at 1.2306, amid a USD across the board move up, included against Yen, helped by rising US bond yields, with 10y back around the 1.8% after 4 months. Local share markets are in the green overall, with Nikkei above the 9000 points rising some +1.61%, following US equity markets with SP500 above the 1400, and less than 20 points below 2012 highs, with record year low volumes, and VIX at a 5 year low. EUR/USD is now about flat for the week. 

London session ahead will be another one again with almost no EUR macro data related to be released, but EU CPI figures at 09:00 GMT as most critical, while in the EZ sovereign debt auctions front there was a Spanish one that has been canceled. Risk premium between Germany and Spain fell yesterday to a several days low around the 500bps, with German yields rising as risk sentiment is improving, and Spanish 10y yields remaining range-bound below the key 7%. Much worse FDI figures today coming from China showing a decrease in -8.7% in Foreign Direct Investment (YoY) (Jul) have been helping the recent rise in USD. 

Immediate support for EUR/USD to the downside comes at current weekly lows 1.2260/4, followed by July 27/Aug 10 lows at 1.2240, and July 13 lows at 1.2162. For the upside, nearest term resistance shows at recent session highs 1.2306, followed by Tuesday's lows at 1.2316, and yesterday's highs at 1.2344.


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