Spanish politics halt euro/dollar above 1.3700
City Index February 4, 2013 1:45 PM
<p>The single currency is trading with a slightly weaker tone at the beginning of the week after marking a fresh 2013 high above 1.3700 late […]</p>
The single currency is trading with a slightly weaker tone at the beginning of the week after marking a fresh 2013 high above 1.3700 late on Friday. The catalyst for the dip comes from weekend reports that Spain’s opposition Socialist Party has called for current Prime Minister Rajoy to resign following allegations that he took secret payments from construction companies – something that Rajoy completely denies. He says that he will provide ‘complete transparency’ over his financial dealings. The scandal hasn’t come at a good time for the ruling People’s Party, with weekend polls showing support for the government has declined to 23.9% from 29.8% last month.
Weaker Australian building approvals data released overnight has led the market to price in a 25% chance that rates will be cut 25 basis points from 3% at the RBA monetary policy meeting tomorrow. The market focus this week will come from European Central Bank leaders as we await any comments from ECB’s Mario Draghi at the press conference on Thursday after last week’s softer bank lending survey and the spectacular 2013 rally in the single currency. Elsewhere, the incoming BoE Governor will be questioned by the House of Commons Treasury committee this week ahead of his first day in the top job.
Data releases today consist of construction PMI from the UK and European PPI data this morning and US factory orders from across the pond as they nurse their super bowl hangovers.
Supports 1.3580-1.3540-1.3485 | Resistance 1.3675-1.3730-1.3790
Supports 92.50-92.00-91.40 | Resistance 93.00-93.25-93.65
Supports 1.5685-1.5650-1.5620 | Resistance 1.5730-1.5780-1.5825