Intraday Market Thoughts

EURUSD Nears 1.27; Consumer Confidence Is Next

by Patrik Urban
Nov 9, 2012 12:45

French and Italian industrial production fell; UK trade deficit narrowed; USDJPY near lows; European sovereign issuance 95% completed. Market turns to import prices and UoM consumer confidence. 1 of 2 EURUSD Premium Insights hit all targets, while oil long stopped out. See more details below.

The common currency has been declining steadily throughout the European session from 1.2785 high to 1.2709 low. Reports disappointed as French industrial production dropped 2.7% in September after growing 1.9% in August and Italian industrial production declined 1.5% from previous 1.7% growth. German CPI was confirmed at 0% m/m and 2.0% y/y.

UK trade deficit narrowed in September to GBP 8.4 bln from previous GBP 10 bln. Smaller gap is attributed to sharply lower oil and fuel imports. GBPUSD trades around 1.5945.

Bond rally that followed after the strong auction yesterday continues as the 10 year yield fell to 1.586% which is the lowest level since the beginning of September. As a result, USDJPY he been under pressure and trades near session lows around 79.20.

Sovereign issuance for this week has been completed and for the next week it is expected to reach EUR 22 bln vs. EUR 11.3 bln this week. According to MNI calculations, EZ issuance so far this year has reached nearly EUR 766 bln which is about 95% of total funding needs. Belgium, Finland and Spain have already completed their long term targets for 2012.

The US session begins at 8:30 am ET with import prices that are expected to remain flat in October after rising 1.1% in September. The University of Michigan consumer confidence is due at 9:55 am and it is seen slightly higher in November at 83.0 from previous 82.6.

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