EUR Breaks 100dma, CAD Shorts Climb

The euro closed below the 100-day moving average on Friday for the first time since September as a banking rumour proved true. The US dollar was the top performer last week while the Australian dollar lagged. Chinese GDP numbers are due early in the week after officials warned about liquidity.  

The euro opens the new week slightly lower as the yen gains broadly. The Chinese central bank urged commercial lenders to strengthen liquidity management and set a reasonable pace on lending in a magazine article. Money market rates jumped last week and Chinese New Year holidays could add further demand for liquidity.

In the immediate term the focus will be on GDP, industrial production and retail sales data due out at 0200 GMT. The pace of fourth quarter growth is expected to be at 7.7% with production rising 9.8% yy and retail sales up 13.6% y/y.

A series of rumors on Friday weighed on the euro. The two main ones were a German sovereign downgrade but that proved to be untrue. The second rumour was trouble at Deutsche Bank and that one proved to be true as they pre-announced a 1.15B euro loss for Q4 on the weekend.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR +7K vs +14K prior JPY -120K vs -129K prior GBP +11K vs +18K prior AUD -51K vs -57K prior CAD -67K vs -61K prior CHF -3K vs +5K prior

The bout of risk aversion after non-farm payrolls shook a few traders out but once again the bulk of traders showed a firm hand. The awful Australian jobs report came after the data was published but neither AUD nor CAD positions are at dangerous levels.