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| German Economic Data Temporary Lifts EUR Posted: 24 Nov 2011 02:27 AM PST
Germany received some good news today with the release of a better than expected German Ifo survey and a strong GDP reading. The positive data comes on the heels of a tough 24 hours for both the EUR and risky assets. According to Destatis, the German economy grew by 0.5% in Q3 and GDP rose by 2.6% y/y. Both metrics were in-line with consensus forecasts. The other positive on the day was the strong Ifo business climate survey, rising to 106.6 from 106.4. The EUR/USD rose as high as 1.3410 before falling back to 1.3370 as investors wait for comments from today's meeting between Merkel, Sarkozy, and Monti. The data caps a poor 24 hours for the EUR and risky assets in general. Yesterday's release of European PMIs along with awful industrial new orders numbers hint at a euro zone economy that is sliding towards a recession. A potential restructuring of the Dexia bailout threatens to weigh on the France's credit rating. Yesterday's failed bund auction also highlights the arrival of the European debt crisis to the core European nations. Investors are looking for a political solution from the European elite but this solution may be further down the road. The movement of the EUR/CHF back below the 1.23 level highlights the amount of stress in the markets. A move back towards 1.20 could bring additional jawboning from the SNB which may support the pair. For the EUR/USD yesterday's low of 1.3320 has so far held this morning with resistance located at the base of the consolidation pattern from the November 17th low at 1.3430. Read more forex trading news on our forex blog. |
| Potential EUR Short Squeeze Before the Weekend? Posted: 24 Nov 2011 12:33 AM PST
The EUR and equity markets have come off of their lows though sentiment remains fragile and any potential rally in riskier assets may only prove to be temporary. With US markets closed for the Thanksgiving holiday flows will be on the lighter side today. Today's highlight will be the meeting between the three leaders of Germany, France, and Italy. There may be a possibility for a EUR rally going into the weekend should German PM Angela Merkel signal her willingness to compromise. Today investors will be focusing on the meeting between Merkel, Sarkozy, and Monti. Perhaps this will be a prelude to the key Dec 9th European Council Meeting. The three leaders of Germany, France, and Italy are expected to hold a press conference at 13:00 GMT today. Should Merkel signal a more open minded approach to euro bonds or additional ECB involvement, EUR shorts could get squeezed going into the weekend. Strict risk management would be a necessity in this situation. EUR/USD support is at yesterday's low of 1.3320 followed by the October low of 1.3145. Resistance comes in at the base of the consolidation pattern from the November 17th low at 1.3430 and at 1.3610 from the November 18th high. Read more forex trading news on our forex blog. |
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