Euro dollar moved up to a higher range, enjoying efforts by the Swiss authorities to weaken the franc against the euro. We have some US figures today, before things warm up with the Merkel-Sarkozy summit tomorrow.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
- Asian session: An active session saw the pair rise above 1.4282, but remain in a limited range.
- Current range 1.4282 to 1.4325.
- Further levels in both directions: Below 1.4282, 1.4220, 1.4160, 1.4070, 1.4030, 1.3950, 1.3838.
- Above: 1.4375, 1.4450, 1.4550, 1.4650, 1.47, 1.4775.
- 1.44 is significant resistance above.
- The 1.4282 switches positions once again to support. It turns into a pivotal line.
Euro/Dollar steady in range – click on the graph to enlarge.
- 12:30 US Empire State Manufacturing Index. Exp. +0.8 points.
- 14:00 US TIC Long-Term Purchases. Exp. 30.4 billion.
- 14:00 US NAHB Housing Market Index. Exp. 15 points.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
- Holiday: In some European countries, Assumption Day is observed, making trade lighter than usual.
- Swiss persistence: The Swiss National Bank has reportedly set a goal for EUR/CHF. The euro-zone is Switzerland’s main trade partner, and a low exchange rate hurts exports and tourism. This indirectly helps EUR/USD climb.
- Trichet continues guarding periphery bonds: The ECB finally provided the necessary intervention in the markets.. This one is serious. Today, the ECB will release the size of these actions, at least up to Wednesday, and we’ll get an idea of the magnitude, that might be turning into QE if the central bank doesn’t sterilize it.. For more on this see: QE Landing in Europe – Euro headed south? In the meantime, Spanish and Italian bond yields remain stable at around 5%.
- French Weakness: The French economy didn’t grow in Q2. This is disappointing, and joins other turmoil surrounding the French Republic which got bad news about its banks, and eventually imposed a ban on short selling, a ban made also in other countries. Tomorrow, Germany will publish its all important GDP for Q2,
- Merkel-Sarkozy summit: Leaders from France and Germany will meet on Tuesday to discuss the situation, with tighter fiscal union on the agenda. Reportedly, the Germans lifted their opposition to euro-bonds – a mechanism for sharing debt. They deny it. They’ll probably want a stronger governing system in order to share debt.
- Italian strike: Italians are upset with the new austerity measures proposed by Berlusconi and Tremonti, especially as they were dictated by the ECB. A general strike awaits the country on August 23rd.
- Spain in trouble: In the meantime, Spain suffers from 50 billion euros of unpaid bills in local authorities and defense contracts worth 26 billion euros that the central government wishes to renegotiate. It cannot pay.
- More Greek haircuts?: According to a few German experts, holders of Greek debt need to accept a much bigger haircut, of 50% in order to make the debt sustainable. Greece remains off the agenda now, but it might return quickly.
- Bernanke uses verbal tools: As expected, the FOMC left rates unchanged and did not provide any hints about QE3, although some await the Jackson Hole Symposium on August 26 for this. What it did do is pledge to leave interest rates low until mid 2013, despite 3 dissenters. The picture that the committee painted for the US economy was quite gloomy. Stock markets are reacting in a very volatile manner..