Fresh euro low ahead of EU CPI 038 FOMC minutes

The euro traded a fresh eight-year low in the early Asian session, with price action likened to the illiquid conditions seen when the week opened in Sydney on Sunday.

The beleaguered single currency traded below 1.1850 for the first time as equities and fixed income markets remain under pressure following the demise of government bonds in the US, Germany and Japan, which has seen investors jump to safe-haven markets.

Oil remains the focal point for financial markets as WTI trades to 47.28, with Brent breaking significant support levels to trade as low as 50.47 as the market now looks to the next major support level of 45.80 to stem the rapid declines. This has seen gold test resistance levels of 1219.

Yields in Asia are not immune to the global inflation meltdown as positive trade data from Australia has been quickly forgotten with Australian 10-year yields tracking the Fed rates lower at 2.68% and Fonterra’s global dairy trade index failed to sustain to 3.6% rally as terms of trade are still seen to be deteriorating.

My inbox this morning consists of numerous research pieces emulating Bill Gross, who suggested that the US will not be able escape the deflation scare and that US rates may not lift off their current base until early 2016.

Today will bring us EU CPI as the market expects a decline to -0.1% from the previous reading of 0.3% and the ADP will give the market an introduction to the NFP report on Friday – with expectations ranging from 210k to 235k for today’s release.

The FOMC minutes this evening will be scrutinised for any deviation from the statement that showed optimism on labour markets, GDP and the positive impact of lower oil prices and a rising USD.

EUR/USD

Supports  1.1840-1.1710-1.1640  | Resistance  1.1950-1.2000-1.2080

USD/JPY

Supports  118.00-118.25-118.80  | Resistance  119.30-120.00-120.85

GBP/USD

Supports 1.5090-1.5000-1.4950 | Resistance 1.5160-1.5220-1.5310