Intraday Market Thoughts

EURUSD Tests 2-week Trendline

by Patrik Urban
Mar 29, 2012 12:38

German labor market improved; all Eurozone confidence measures declined; UK house prices dropped and mortgage approvals declined; Italian auction. Market turns to final Q4 GDP, jobless claims; Bernanke and Lockhart speeches. EURUSD testing the trendline support from the Mar 15 low. New Premium Intermarket Insights are due befoe the end of the London session.

The USD is higher across the board in the ongoing session. Major European equity indices are lower by around 1%. The relative strength winner is JPY, NZD is the weakest.

EURUSD rose briefly on a report that German unemployment decreased by 18K in March from -3K in February. The unemployment rate also ticked lower to 6.7% from 6.8%. However, sellers emerged around 1.3340 and sent the pair lower to 1.3271. Risk off sentiment combined with month end repositioning seems to be controlling the market.

All Eurozone reports disappointed today. Business climate fell to -0.30 in March from February's -0.16, consumer confidence slipped to -19.1 from -19 and economic sentiment ticked lower to 94.4 from 94.5, which is the first decline since December.

UK housing data did not provide many reasons for optimism either as nationwide house prices fell 1% in March from 0.4% (-0.9% from 0.9% y/y) and February mortgage approvals dropped to 49K from 57.9K to the lowest level since June 2011.

On a positive note, Italy had another successful bond auction. It reached a full take up as it sold 2017 and 2022 bonds worth of EUR 5.75 bln. Both average yields declined and cover improved.

The US session kicks off at 8:30 am ET with the final Q4 GDP that is anticipated unchanged at 3% y/y. The rest of the data is also seen steady - GDP price index at 0.9%, core PCE at 1.3% and personal consumption at 2.1%. Jobless claims that are due at the same time are expected to rise slightly to 351K from last week's 348K.

Market volatility could increase at 12:15 pm when Atlanta FED president and FOMC member Dennis Lockhart delivers a speech on European crisis. FED chairman Bernanke will give his fourth and last lecture at the George Washington University at 12:45 pm.


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