28 August, 2015
The EURUSD hit a low near the key 1.12 support level on Thursday , I previously posted “I continue to see EURUSD risk to the downside in the immediate short term as price may attempt to re-test the mid to low 1.12’s where buyers could potentially emerge to support the pair.” This I posted when the EURUSD was trading around 1.1311. At the moment, the euro is likely to continue its bounce off the key support as buyers emerged to support price. The risk for short sellers is that the latest bounce could extend out towards the 1.14’s – 15’s. However, traders should be on alert for any price drop below the 1.12’s as this move may raise fears for a return towards the low 1.11’s to mid 1.1150’s.
The rebound on stock markets continued in Asia, with the Shanghai Comp up 1.77% and Japanese markets outperforming. The USD managed to firm up in the wake of renewed optimism about the U.S. economy following yesterday’s revised Q2 GDP, which also helped the U.S. Dow Jones to close up 2.30% on Thursday. Today, the Eurozone stock markets are broadly lower, with Eurozone markets underperforming and the DAX down around 8% for the month. The markets are now hoping that stimulus from central banks may have helped to limit the sell off. Uncertainty about growth and central bank outlooks is adding to market volatility and means the impact of stronger than expected data is unclear.
Currency Pairs, Grouped Performance (% change)
Current intraday percentage change of currencies against other major currencies since the daily close 23:59:59 server time.
The AUD is weaker across the board as commodity prices will continue to dictate the level of the AUD. Also, the unrest in China’s stock markets remains the major risk factor for the AUD. The GBP trades lower after a bout of sterling buying in the wake of UK Q2 GDP data, which was unrevised at +0.7% q/q.
Significant daily support and resistance levels for these pairs are:
Main Macro Events Today
• GBP UK Q2 GDP: UK GDP was left unrevised at +0.7% q/q and +2.6% y/y in second-estimate data, matching expectations. Growth in 2014 was also left unrevised, at 3.0%. The breakdown showed a 3.7% q/q rise in exports versus just a 0.6% q/q increase in imports, while consumer spending eased to +0.7% q/q. Encouragingly, business expenditure rose 2.9% q/q, the biggest rise in 12 months, and by 5.0% y/y.
• USD Michigan Consumer Sentiment Index (Aug): The second release on Michigan Sentiment is out Today and we expect the headline to be revised up to 93.5 (median 94.0) after a 92.9 headline in the first release that marked a decline from 93.1 in July. The tendency over the past year has been for upward revisions and consumer confidence for the month spiked higher, rising to 101.5 from 91.0 in July. These two factors should lend upside risk to the release.
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