The EURUSD Range Bound Ahead of US Open
In the US, the CPI and the industrial production data will be published, but we assume that they will only be of intraday significance for global markets and for EUR/USD trading. Of course, there will be plenty of headlines from the EU summit. As such, the steps taken by the EU on the banking Supervision/Banking resolution are important. The question is whether they will have much impact on the currency markets. At least over the previous days global sentiment on risk and technical factors were more important as a driver. So, we look out which way the risk rally will go from here.
Will there be consolidation or even a correction going into the end of the year. In a day-to-day perspective, the developments in the likes of EUR/JPY will have some impact on the headline pair, too. At least for now, the weakening of the yen/rise in EUR/JPY is a short-term supportive for EUR/USD, too. However, we might see quite some volatility (in both directions) ahead of and after this weekend’s parliamentary elections. The day-to-day momentum of EUR/USD was constructive of late. The pair is coming again close to key resistance. Stay open-minded, but at least for now, we don’t see a fundamental reason for a new sustained up-leg of EUR/USD from the current levels.
Asian equities show a mixed picture. Chinese markets jumped higher supported by a decent HSBC manufacturing PMI. At the same time, the Tankan survey in Japan showed a further worsening of business confidence. Japanese indices underperformed even as the yen weakened further. This context contains some mixed signals for the euro. However, upward pressure from the likes of EUR/JPY is keeping EUR/USD well supported too. The pair tries to regain the 1.31 mark at the moment of writing.
US futures are set for a higher opening ahead of data, while European markets are mixed after a day of mixed data. The over results of the eurozone eco data was neutral for the markets. Data showed today that inflation in the 17-country eurozone fell sharply to 2.2 percent in November from 2.5 percent in October, official data confirmed on Friday, as the slowing economy took pressure off prices. Europe’s leaders decided to push back radical moves to fix faults in the euro at the final summit of a crisis-hit 2012 that saw much-trumpeted deals to save Greece and monitor big banks. The Eurostat data agency gave national breakdowns as 1.9 percent for Germany, 1.6 percent for France and 2.6 percent for Italy, with Greece at just 0.4 percent.
At the end of a year that saw Greece near to bankruptcy and a eurozone exit with the crisis spreading to Spain and Italy, leaders were keen to look forward after releasing funds for Athens and agreeing to supervise big banks.
As EU leaders also tasked their foreign ministers to look at “all options to support and help the opposition,” British Prime Minister David Cameron said that “inaction and indifference are not options.”
Europe started the year with many “seriously questioning whether the euro and indeed European integration would survive,” recalled European Commission President Jose Manuel Barroso.