EUR Rebounds From 15-Month Low, China PMI in Focus

The euro fell to the lowest levels of the year but rebounded a full cent as flows dominate the final hours of 2011 trading. In a tell-tale sign of the uneven trading day, AUD and JPY were the best performers while GBP and USD lagged. The final reading on the HSBC China PMI is the lone event of the Asia-Pacific session. Thursdays Premium Intermarket Insights played the risk trade, shorting USDCAD but remained short AUDUSD. Other trades include EURUSD, EURJPY, AUDUSD, USDCAD, gold & silver found below.

The euro fell to a 15-month low after the Italian government paid 6.98% in a 10-year note sale, dashing hopes for an LTOR-driven bid. Other yields were better, however, and the euro bottomed as US traders arrived to their desks. EUR/USD went on to rebound to 1.2963 from a low of 1.2858.

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Economic data also bolstered confidence. The Chicago PMI essentially held steady at 62.5 compared to the 61.0 expected and pending home sales rose 7.3%. A lone trouble-spot was jobless claims which climbed to 381K versus the 370K expected. In spite of the miss, claims still remain well-below the 400K danger zone.

Gold fell in tandem with the euro, breaking the September spike low of $1532 and touching the lowest since July. But it also rebounded and closed out the day at $1544. Hedge fund and central bank selling has been widely speculated as a factor in the decline. Technically, the intraday fall also broke below the uptrend that began in late 2008.

The S&P 500 climbed 1.0% to 1262, moving back into narrowly positive territory on the year.

The lone indicator of note in Asian trading is the HSBC China manufacturing PMI at 0230 GMT. The flash estimate rose to 49 in December compared to 47.7 the month before.