EUR/USD is now trading lower, flirting with hourly uptrend support as clarification on a Spanish aid request is still awaited. Spanish officials still say they need time, and in the meantime, yields on Spanish bonds creep higher. In addition, tensions in the Arab world as well as those between China and Japan are helping the safe haven dollar. Some interesting US indicators are released later on.
Here’s an update about technical lines, fundamental indicators and sentiment regarding EUR/USD.
- Asian session: Euro/dollar struggled to hold on to 1.31 during the Asian session and extended the slide later on.
- Current range: 1.3060 – 1.3105
- Below: 1.3060, 1.30, 1.29, 1.2814, 1.2750, 1.2670, 1.2624, 1.2587, 1.2520 and 1.2460.
- Above: 1.3105, 1.32, 1.3290, 1.34, 1.3437, 1.3480 and 1.3540.
- Note the uptrend support line that accompanied the pair since September 6th. The pair is flirting with it again.
- 1.30 turns into support, but 1.2960 should be noted.
- 1.3060 is an important line. A break higher could result in a fast rally.
Euro/Dollar sliding as patience with Spain is falling – click on the graph to enlarge.
- 9:00 German ZEW Economic Sentiment. Exp. -19.2 points. All European sentiment exp. -16.3 points. Actual -18.2 points.
- 12:30 US Current Account. Exp. -$126 billion.
- 13:00 US TIC Long-Term Purchases. Exp. 37.3 billion.
- 14:00 US NAHB Housing Market Index. Exp. 38 points.
- 15:30 and 20:30 US FOMC member William Dudley talks
- Market Losing Patience with Spain: Spanish officials said once again that they need more time to understand the details before acting. Some speculate that Rajoy would prefer to push the official request until after October 21, due to internal calculations. An ECB official made it clear that the OMT program is going to be utilized and isn’t only a threat. As Thursday’s important bond auction draws near, Spanish 10 year bond yields are around 6% once again. Spain’s problems cannot be swept under the carpet. Bankia is a black hole for money, and the deterioration of the crisis also aided the separatists in Catalonia. The streets of Barcelona were flooded with people calling for independence.
- Geopolitical Tensions: Another bombing in Kabul against Western targets joined many demonstration in various Arab countries against the US after a film insulting the prophet Muhammad circulated. In China, demonstrations against Japanese targets forced a closing down of Japanese factories. The background is the purchase of disputed islands by the Japanese governments. These islands could be used as military bases and impact the sovereignty of the waters around them – waters that could contain useful resources.
- QE3 is Still Felt : On Thursday, it finally happened: the Fed launched an open ended program worth $40 billion dollars of monthly buys of MBS in order to help the housing sector, but also to encourage lending. This comes in addition to extending the low rates guidance to 2015 and continuing the existing Twist program worth $45 billion a month. This aggressive easing was later justified by Bernanke, who also said that the Fed is looking at the general picture of unemployment (including the participation rate). Apart from the yen, all currencies gained against the greenback.
- Greece likely to get more time: Various EU officials have hinted flexibility regarding Greece’s schedule, stressing it doesn’t mean more money. Greece’s three coalition partners are still unable to agree on new austerity, as the economy continues to contract. In the meantime, anti-austerity parties have gained in the polls, and dismal unemployment figures worsened, as the unemployment rate rose to a staggering 24.4%, up from 23.5%. The government has no easy task in trying to implement cuts of 11.5 billion euros, which is necessary in order to received further bailout payments. Talks about a third bailout program became more loud in recent days, as Greece is nowhere close to meeting targets.