Solid industrial data from Europe sends Euro to all-time high

Solid industrial data from Europe sends Euro to all-time high. Canadian dollar approached its 30-year high as crude oil rose to a record US$80 a barrel. Gold holding steady on general dollar weakness.

News and Events:
European industrial production figures came out stronger than expected at 0.6%m/m in July, an increase from a steady June. The data, coupled with the European Central Bank’s optimism on economic outlook sent the Euro to an all-time tradable high of 1.3915 in late trading yesterday. Market participants however indicate to increasing downside risk as investors may not share the same amount of positive sentiment as the ECB. Nevertheless, traders eye the 1.4000 level for the Euro in the short-term.

Although general US dollar weakness has helped the Canadian dollar, the pair approached its 30-year high as the market saw another wave of buying based on the Fed cutting rates next week, making the Canadian currency more attractive on rate differentials. The currency also rose as crude oil hit record levels at US$80 a barrel.

Gold held steady at $711/oz as general dollar weakness and market instability drove prices to new highs. With gold pulling back yesterday and this morning, it is still too early to tell whether a correction will begin, before aiming for $730, a return to the high of May 12th, 2006.

Today’s Key Issues (time in GMT):

08:00 EC ECB Publishes Sep. Monthly Report
08:00 IT CPI (NIC incl. tobacco) (MoM) AUG
08:00 IT CPI (NIC incl. tobacco) (YoY) AUG
08:00 IT CPI - EU Harmonized (MoM) AUG F
08:00 IT CPI - EU Harmonized (YoY) AUG F

09:00 EC Eurozone Employment (QoQ) 2Q
09:00 EC Eurozone Employment (YoY) 2Q

12:30 CA Capacity Utilization Rate 2Q
12:30 US Initial Jobless Claims Sep-08
12:30 US Continuing Claims Sep-01

18:00 US Monthly Budget Statement AUG

The Risk Today:

EurUsd: last resistance found at 1.3968 before reaching 1.4000. Downside risk increases to 1.3765.

GbpUsd still remains firmly in its uptrend with 2.0398 as target a resistance. Support holds strong at 2.0235.

UsdJpy focuses on 112.61 and 111.61 and remains below the resistance of 115.66.

UsdChf Key support found at 1.1816, however entirely bearish under 1.1962.

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Resistance and Support:

By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland