EURUSD Regains 1.23 as Holiday Vaccum Dilutes Fear

JPY GDP slowed; Greek GDP shrank further; German WPI and French current account. Eurozone issuance for this week; Periphery yields marginally lower. 4 of Wednesdays Premium Insights trades hit all targets, with 2 stopped out and 5 in progress. See more info below.

JPY crosses largely ignored weaker than expected Japanese growth figures after Q2 GDP slowed to 0.3% from 1.3% q/q and to 1.4% from 5.5% y/y. On the positive side, this was fourth quarterly growth in a row and both quarterly and annual data was revised higher. USDJPY trades slightly weaker but still holds above the key short term support around 78.00.

USD Index shows a disconcerting pattern of lower highs and lower lows after failing to regain its 55 DMA. S&P500 is on its way to its 6th consecutive daily gain, the longest winning streak since March 2010.

The frustration with Greece seems to be growing according to a report published on Reuters. German deputy parliamentary leader Michael Fuchs said that Germany would veto further aid if Greece would not meet the conditions of the bailout. Meanwhile, Greek Q2 GDP contracted 6.2%, which is marginally better than 6.5% contraction in Q1.

European data calendar was light today with only second tier data. German wholesale price index rose in July 0.3% from -1.1% m/m which translates to 2% from 1.1% y/y and French current account deficit widened to EUR 4.9 bln in June from previous 4.0 bln.

According to MNI, Eurozone sovereign t-bill issuance is expected to rise to EUR 25 bln this week, more than double issued last week. Germany and Italy were the first to come to the market. Germany sold EUR 3.77 bln vs. EUR 4 bln target of 6 month bill with average yield -0.0499% from previous -0.0344% and cover declined to 1.3 from 1.7. Meanwhile, Italy reached a full target as it sold EUR 8 bln worth of 12 month BOT. The average yield rose slightly to 2.767% from 2.697% but cover improved to 1.69 from 1.55. Decent result helped to underpin the common currency that broke above the resistance and trades firmly above the 1.23 handle.

Spanish and Italian 10 year yields declined slightly to 6.83% and 5.86% respectively.

There are no US reports due during the US session.

In Wednesdays Premium Insights, 1 EURUSD short hit all targets, the other in progress. 1 GBPUSD long hit all targets, the other stopped out. 1 CADJPY hit all, other unfilled. AUDJPY hit all. AUDUSD stopped out by 3 pips. Both Gold and oil trades are in progress. Direct access here: http://ashraflaidi.com/products/sub01/access/?a=673 To subscribe, pls click here: http://ashraflaidi.com/products/sub01/