DAX Rally Hit Back at Euro, Carney Next
It's another case of USD rallying on non-US events before pausing on reality at home. Two days ago, the USD rallied on Greece uncertainty ahead of the Greek parliament vote only to find an unexpected 0.3% contraction in US retail. Today's greenback rally re-emerged on the prospects of renewed run-up in Eurozone equities (especially Germany), which would require fresh hedging of euro exposure at the expense of the single currency. But the USD was checked by an unexpected decline in the July Philly Fed survey, hitting a 4-month low of 5.7, with a contraction in the employment index.
On the euro front, ECB president Draghi announced a EUR 900 mln increase in the ELA for Greek banks for 1-week after a EUR 7 bln bridge loan for Greece was confirmed. The loan will enable Greece to meet its EUR 3.49 bn payment to the ECB on July 20.
DAX Rally Hit Back at Euro
As the DAX breaks above its 100-DMA, EURUSD deepens its breakdown below its 100-DMA hitting a 7-week low. The 3rd element of this relationship are bund yields, which broke a 3-day losing streak, cheered on by Draghi's comments that recent events in Greece had not changed the ECB outlook for further recovery in Eurozone inflation. And so the question becomes to what extent bund yields and the DAX-continue rallying, while the euro ignores yields and remains pressured.Sterling bulls were dealt a scare to see cable drop below 1.5570 before stabilising above its 55-DMA. GBP traders await BoE governor Carney's comments due at 19:00 BST. A new Premium note on our EURUSD will be issued later today.
![Dax Yields Jul 16 DAX Rally Hit Back at Euro, Carney Next - Dax Yields Jul 16 (Chart 1)](/content/images/forex-news/dax-yields-jul-16.jpg)
Act | Exp | Prev | GMT |
---|---|---|---|
Philadelphia Fed Manufacturing Survey (JUL) | |||
5.7 | 12.0 | 15.2 | Jul 16 14:00 |
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