EUR/USD posted is steady in Thursday trading, after posting limited losses on Wednesday. The pair is trading slightly over the 1.31 line in the European session. On Wednesday, US Federal Reserve chair Bernard Bernanke testified in before a congressional committee in Washington, and stated that QE tapering will require a stronger US economy. Meanwhile, US releases disappointed on Wednesday, as Building Permits and Housing Starts both missed expectations. Taking a look at Thursday’s events, there were only two releases out of the Eurozone. Current Account fell short of the estimate, and Spanish 10-year bond yields showed little change. In the US, Fed chair Bernanke will testify before the US Senate Banking Committee. There are two key releases out of the US – Unemployment Claims and the Philly Fed Manufacturing Index.
There was plenty of anticipation ahead of US Federal Reserve chair Bernard Bernanke’s testimony in Washington on Wednesday, but anyone looking for drama and excitement was sorely disappointed. What Bernanke served was essentially the same menu we’ve seen before with regard to QE. The Fed chief sounded extremely vague when he stated that the Fed bond-buying was “not on a preset course”, leaving the Fed plenty of wiggle room to scale down QE should it choose to do so. Bernanke reiterated that any decision to scale down QE would depend on improving economic conditions. He noted that present unemployment levels (7.6%) were “well above” normal levels, and was careful to stay away from presenting any time deadlines for scaling down QE. So, the message from the Fed to the markets seems to be that QE tapering is not on the table before the economy improves and unemployment falls. Bernanke will continue his testimony before a Senate committee on Thursday, and it’s unlikely we’ll hear anything unexpected.
German releases continue to be a source of concern, as recent numbers have not impressed. Earlier this week, German ZEW Economic Sentiment, a key release, came in well below expectations. Last week, German Trade Balance and Industrial Production both missed their estimates. The number one economy in Europe may be in better economic shape than its neighbors, but if the Eurozone is to get back on the road to recovery, it will need a strong Germany leading the way.
Spain is back in the headlines, as a political scandal continues to intensify and could bring down the Spanish government. There are accusations that Prime Minister Mariano Rajoy received illegal payments when he served as a minister in a government back in the 90’s. There have been demonstrations and calls from the opposition for Rajoy to resign. For his part, the prime minister has denied all wrongdoing, but this scandal is clearly not going to just go away, and could throw the Eurozone’s fourth-largest economy into turmoil.
EUR/USD for Thursday, July 18, 2013
EUR/USD 1.3112 H: 1.3126 L: 1.3091
EUR/USD has quieted down on Thursday, after posting some losses the previous day. The pair continues to receive support at the round number of 1.31. This is a weak line, and was breached in the Asian session. The next support level is at 1.3050. On the upside, the pair faces resistance at 1.3162. This is followed by stronger resistance at 1.3275.
- Current range: 1.3100 to 1.3162
Further levels in both directions:
- Below: 1.3100, 1.3050, 1.3000, 1.2943, 1.2844 and 1.2751
- Above: 1.3162, 1.3275, 1.34 and 1.3476
OANDA’s Open Positions Ratio
EUR/USD ratio has reversed course from the trend we have seen all week, and is currently showing movement towards long positions. We are not seeing this movement reflected in the pair’s current movement, as the euro is not showing much movement so far in Thursday trading.
EUR/USD is enjoying a quiet day, as it trades just above the 1.31 line. This inactivity could change later on, as the US releases key employment and manufacturing numbers later in the day. As well, Bernard Bernanke continues to testify in Washington, and the markets will be monitoring that event carefully.
- 8:00 Eurozone Current Account. Estimate 21.3B. Actual 19.6B.
- 8:54 Spanish 10-year Bond Auction. Actual 4.72%.
- 14:00 US Philly Fed Manufacturing Index. Estimate 8.5 points. Actual 19.8 points.
- 14:00 US CB Leading Index. Estimate 0.3%. Actual 0.0%
- 14:30 US Fed Chairman Bernard Bernanke Speaks. Bernanke will testify before the Senate Banking Committee in Washington.
- 14:30 US Natural Gas Storage. Estimate 63B.
*Key releases are highlighted in bold
*All release times are GMT
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