Chinese manufacturing data adds to risk woes as we await FOMC announcement
City Index August 1, 2012 6:45 PM
<p> EUR/USD Range: 1.2279-1.2319 Support: 1.2210 Resistance: 1.2410 Euro rallied back above 1.2300 yesterday on month end rebalancing demand but couldn’t find the legs to […]</p>
Euro rallied back above 1.2300 yesterday on month end rebalancing demand but couldn’t find the legs to close above the 1.2330-1.2335 level. Chinese PMI data came in at 50.1 below the market forecast of 50.3, which weighed on risk and the single currency taking the latter back below 1.2300. We are only a day away now from the ECB meeting, with expectations running high that ECB President Mario Draghi will back up last week’s comments that he has a plan to save the euro. I’m saving my trade for the press conference.
Range: 1.5654 – 1.5682
As mentioned yesterday, the month end re-balancing flow kept sterling on the back foot as EUR/GBP demand dominated proceedings. Cable held the 1.5600-1.5620 level and we have subsequently traded back towards 1.5700. The first of the UK PMI data is out today, with the manufacturing sector expected to come in at 48.6 but as regular readers will note I prefer the service sector to be a better guide. Some traders may be looking for a weak number which could send the currency pair lower, and they may look to use this as a buying opportunity.
USD/JPY moved below 78.00 overnight as safe haven JPY buying was evident after the Chinese data added to global growth woes. We are now very close to BoJ intervention territory. The FOMC meeting this evening is likely to show an extension to the ultra low interest rate outlook until early 2015, keeping their powder dry for more QE until September. The intervention could be ineffective, however, as a weak non-farm payrolls number on Friday could reverse any gains as we have seen in the past.
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