Euro faces heavy selling pressure on weaker data

Thursday, August 07, 2014

With both the ECB and BOE announcing their rates decision today all eyes will be on both sterling and euro. The euro faced significant selling pressure early on yesterday as a string of bearish economic data releases saw the currency fall to its lowest levels since November last year, at one point trading towards 1.3333 against the dollar. A catalyst for the move out of the euro was weaker than expected German factory orders data, which slipped to -3.2% in June against expectations of 0.9% growth. Further selling pressure was contributed by the release of weaker Q2 Italian GDP which contracted for the second straight session, pushing the country into recession once again and putting increasing pressure on policymakers to act with further stimulus. Sterling remained under pressure yesterday, slipping below the 100 day MA once again after a brief respite to the steady declines that have dominated July trading at the start of the week. 

Wall Street managed to stem any further declines yesterday as Russia concerns continued to weigh heavy on global equity markets. Both the S&P 500 and DJIA closed marginally higher as a combination of scant macro data and geopolitical concerns ensured gains were limited. The dollar index closed slightly lower yesterday after surging to a ten month high towards 81.716. The index gapped significantly higher at the open as investors sought out a safe haven before pulling back towards 81.40 later on after which levels eventually closed at 81.444. The DXY has rallied 2.1% since the beginning of July on stronger US growth prospects and geopolitical tensions.

Gold prices rallied higher yesterday as spot prices posted their biggest advance since mid-July as Russian troop movements close to the Ukrainian border agitated investors and increased risk aversion. Spot prices added 1.33% yesterday and upward momentum seems to be holding up well early on this morning with prices supported firmly at yesterday’s close as the yellow metal trades around $1,305/oz at the time of writing.

EUR sees intraday dips towards 1.3333 against the dollar

EUR Curncy Euro Spot Daily 01 2014 08 01 16 27 43 

Events for today

1200

UK

Aug

BoE Rate

1245

EZ

Aug

ECB Rate

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

2000

US

Jun

Consumer Credit

Topics: Gold, EUR, DXY, GBP
More from: Kash Kamal