Euro Ignores Another Set of Poor Data

Euro continues to shrug off weak data and remains strong. GBP is the relative strength loser. Market is likely to calm ahead of Jackson Hole Symposium.

Euro continues to be strong despite yet another disappointment from Germany. GfK Consumer Confidence Survey for September came fell from 5.3 to 5.2 showing the worst print since October 2010.

Todays data from Switzerland is not any better. ZEW Economic Expectations survey saw 5th straight monthly decline in August when it dropped to -71.4 from previous -58.9. Last time the sentiment was this poor was at the end of 2008. CHF weakened about 30 pips after the announcement but it is likely that the overall sentiment will be more important for the future direction of the CHF.

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UK CBI Realized Sales suffered the biggest fall in a year when they dropped from -5 to -14. GBP is the relative strength loser as it could not rally even when Euro was rallying nearly 100 pips. GBP continues to trade in a narrow range and consolidates yesterdays losses. A break below yesterdays low would open a way for a test of a support at 1.62 which coincides with 50% fib. retracement of a rally from 1.5779 to 1.

6443.

New York session will bring weekly unemployment claims due at 8:30 am that are expected at 403K from previous 408K.

The FX market is likely to calm down a bit as traders are unlikely to want to open new positions ahead of Ben Bernankes 10:00 am ET Fridays speech at Jackson Hole Symposium. Rising consumer and producer inflation decreases chances of an announcement of QE3 so his speech is likely to only reaffirm pledges that rates will stay at current levels with the possibility of capping yields should it be warranted. Equity markets have been anticipating additional stimulus so the lack of an announcement could see a market selling off.

Gold and silver continue to drop after a margin hike announcement. Gold lost almost 200 USD since peaking at 1912 just three days ago. The situation in silver is similar as both metals trade below yesterdays lows. Silver trades right above the 39 mark.