Risk under pressure as political drama in Europe dominates proceedings
City Index May 15, 2012 1:00 PM
<p>EUR/USD Range: 1.2814 – 1.2855 Support: 1.2800 Resistance: 1.2900 The euro traded through the 2011 lows of 1.2858 yesterday, failing just short of the 1.2800 […]</p>
Range: 1.2814 – 1.2855
The euro traded through the 2011 lows of 1.2858 yesterday, failing just short of the 1.2800 level following rating agency Moody’s downgrading of 26 Italian banks, citing weak earnings and a poor economic outlook in Italy. The price action has been rather orderly as we trade through yearly lows for the single currency which, for me, shows how short the market is. The market seems to be taking a Greek exit in its stride so I’m getting cautious of a short squeeze with new French PM Hollande due to meet the German Chancellor Merkel today along with the release of the German ZEW data our at 10am, with a reading of 19.5 expected.
Range: 1.6087 – 1.6106
Sterling continues to trade with a certain European safe haven status as investors look for diversification over the continuing Greek election drama. Cable continues to see demand at 1.6050 and 1.6000 and EUR/GBP trades convincingly through 0.8000 (£/euro 1.2500). This morning we see the release of UK trade data, with the market expecting a deficit of £8.4 billion.
Range: 0.9946 – 1.0006
AUD is trading 50 points either side of parity with risk and commodities trading softer. RBA minutes were released in Sydney overnight but they did not surprise or move the market as the board gave no hint of a further cut in the cash rate, with the statement seen by the market as very neutral. This afternoon sees the release of US retail sales data for April and the core US CPI reading, both of which are expected to come in at 0.2%.
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