Intraday Market Thoughts

Euro Limps On, Aussie Retail Sales Next

by Adam Button
Nov 3, 2013 21:59

All eyes are on the ECB and the slumping euro heading into a new week. The Canadian dollar was the best performer last week while pound sterling lagged. The week starts off with Australian dollar retail sales due next.

The euro headed into the weekend in freefall on a six consecutive days of declines including a 260 pip swandive on Thursday and Friday. An ominous sign was the near-total lack of a bounce heading into the weekend and a close at 1.3487. There is some support from the October low at 1.3473 and the 55-day moving average at 1.3476.

Given the uncertainty about what the ECB will do this week, we assume some kind or relief rally will take place before the Nov 7 decision. The magnitude and timing is certainly up for debate and it's possible the ECB will leak some type of hint at what it intends to do so the headline risk is considerable.

Speaking of the 55-day moving average, the US dollar is approaching or has surpassed the technical marker on a number of crosses including cable, USD/JPY, NZD/USD and the Dollar Index. We're also reminded that the dollar is the second-best performing currency this year despite a disappointing economy, dysfunction in the government and the lack of a taper.

The technical signs are beginning to align for the dollar and November is a solid seasonal month for USD. Better economic data or a stronger hint at a taper could lead to an extended dollar rally.

At 00:30 GMT/London, Aussie September retail sales are on the docket for Australia. The consensus is for a 0.4% rise. At the same time, the high-flying house price index is expected to rise 7.6% year-over-year.

Later, with the market still confused about exactly where the Fed stands we will here from outspoken Dallas Fed President Fisher at 0000 GMT. He's on a visit to Sydney.

Our Premium Insights has 2 EURAUD in progress as a hedge to this week's s event risk in  EUR and AUD pairs, alongside 2 new charts in EURAUD. Full trades and charts in the latest Premium Insights.
Act Exp Prev GMT
Retail Sales (SEP) (m/m)
0.4% 0.4% Nov 04 1:30
House Price Index (Q3) (q/q)
2.1% 2.4% Nov 04 0:30
House Price Index (Q3) (y/y)
5.1% Nov 04 1:30

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