Volatility has picked up sharply in European trade with the latest bout of currency consolidation coming to an end in favor of additional USD strength, following the break to fresh 2010 lows in Eur/Usd below 1.3585.
MORNING SLICES (Abridged)
FUNDYS
Volatility has picked up sharply in European trade with the latest bout of currency consolidation coming to an end in favor of additional USD strength, following the break to fresh 2010 lows in Eur/Usd below 1.3585. There have been a number of factors influencing price action today, including a very concerning bout of data out from the Eurozone. German GDP was released early on and set the tone, with Eurozone GDP and industrial production following later in the session and also coming in much weaker. Meanwhile, the failure by the EU to produce a formal rescue plan for Greece, and an unexpected hike from China of its reserve requirement by another 0.50% have also been seen weighing on sentiment.
Relative Performance Versus USD on Friday (As of 10:30GMT) –
[B]
- YEN -0.09%
- STERLING -0.55%
- CAD -0.62%
- SWISSIE -0.99%
- EURO -1.02%
- KIWI -1.04%
- AUSSIE -1.17%[/B]
Elsewhere, the Eur/Chf cross has attracted much attention on Friday with the market trading in whipsaw fashion after reported SNB intervention efforts failed to keep the rate elevated. We are starting to see a fresh wave of carry liquidation with the massive bout of flight to safety buying, hitting the higher yielding currencies quite hard heading into US trade. The Australian Dollar has been aggressively sold following the China announcement and break to fresh lows in Eur/Usd.
Looking ahead, US retail sales (0.3% expected) are due at 13:30GMT, along with Canda new motor vehicle sales (2.0% expected). University of Michigan confidence (74.8 expected) follows at 14:55GMT, with business inventories (0.2% expected) capping things off at 15:00GMT. US equity futures have reversed and trade with a heavy tone, while commodities are also weighed down on similar themes.
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Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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