Jackson Hole today ends a dull August but September is set to be eventful
City Index August 31, 2012 2:23 PM
<p> EUR/USD Range: 1.2492-1.2521 Support: 1.2450 Resistance: 1.2600 Friday is finally here and the long awaited Bernanke speech is almost here. The US data has […]</p>
Friday is finally here and the long awaited Bernanke speech is almost here. The US data has improved since the last FOMC meeting and the financial conditions in the US are better than they were when previous QE triggers have been pulled thus I expect the Chairman to outline stimulus tools that are available and not signal asset purchases. I believe expectations have been scaled back for outright asset purchases this week and positioning is cleaner in the short term euro market especially after the Slovakian PM said there is a 50/50 chance of a euro break up. The market gauges that the end of month rebalancing flows are USD positive.
Range: 1.5777 – 1.5801
Sterling near term fortunes are dominated by the general USD move that is consistent within the G10 space. Month end fixed will come into play this afternoon with speculation we will see the usual demand for EUR/GBP. It will be all about the Fed chairman at 3pm today.
The market shrugged off very weak numbers from Japan overnight as industrial production dropped to -1.2% with the market consensus being for a rise of 0.4%. The flow was mixed overnight as the end of month rebalancing flow showed buying interest only for exporter supply to cap the move. If Bernanke does keep the FED powder dry a test is likely.
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