Eur/usd - page 316
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On Friday session the EURUSD pair rallied for the third straight day and closed well in the green near the high of the day on a wide range. The currency is setting its self to reach today, May’s high at 1.1460.
Euro Strengthens to $1.15 for First Time Since February
The euro strengthened to $1.15 for the first time since February and the yen also rallied against the dollar as traders have almost stopped believing the Federal Reserve will raise interest rates next month.
Japan’s currency rose to a three-month high, as slumping commodity and share prices propel the selloff in emerging-market currencies that started after China’s shock devaluation on Aug. 11. Russia’s ruble was the hardest hit of 31 major peers on Monday versus the dollar. Australia’s Aussie reached a six-year low.
“The yen and euro are benefiting from both emerging-market risk aversion caused by China’s surprise move this month on the yuan and from falling expectations that the Fed will hike interest rates,” said Mansoor Mohi-uddin, a senior markets strategist at Royal Bank of Scotland Group Plc in Singapore.
The euro climbed 0.9 percent to $1.1491 at 9:35 a.m. in London after reaching $1.15 earlier, a level not seen since Feb. 3. The yen strengthened 1.3 percent to 120.46 per dollar. It reached 120.25, the strongest since May 19.
The Aussie dropped to 72.01 U.S. cents, the lowest since April 2009, before trading at 72.49, down 0.9 percent in the day. New Zealand’s currency slid 1.3 percent to 66.02 U.S. cents.
‘Selling Interest’
Traders are pricing in a 30 percent probability that the Fed raises rates at the September meeting, down from about 50 percent before China devalued its yuan. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.
The euro has strengthened about 4.6 percent since July, while Germany’s DAX Index has tumbled 13 percent, heading for its worst monthly drop in four years.
“We would not be surprised with selling interest emerging again closer to the session highs at $1.15, but looking more broadly, a test of $1.1550 cannot be ruled out should equities weaken further and the strong negative correlation between the euro and the DAX persists,” said Prashant Newnaha, a rates strategist at TD Securities Inc. in Singapore.
The Swiss franc, euro and yen were the best performers among 10 developed-nation peers in the past week, according to Bloomberg Correlation-Weighted Currency Indexes.
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On Friday session EUR recorded significant growth for third consecutive day and closed at highest level against USD since mid-May. The euro rose by nearly 130 pips to 1.1366. The daily limit values were reached respectively at 1.1375 and 1.1228. The week was successful - EUR / USD is up by 2.3%. Current attitudes are positive but for continuing upward move is needed breakthrough of 1.1380 / 1.1400. Otherwise there is possible correction to 1.1290.
EUR/USD: Greenback Shredded as Panic Sweeps Markets
The shared European currency continued to flog its US counterpart on Monday, as a persisting rout in emerging markets, most notably China, threatened to boil over into a full-blown global economic slump, triggering a rethinking of interest rate policy expectations.
The euro gained 2.38% to buy $1.1646, after setting intraday highs at $1.17. The last time the pair had traded at similar levels was on January 15. The common currency is on track to mark a streak of four days without a loss, which translates to a gain of about 6%.
"Net EUR shorts dropped heavily last week. This is consistent with the better tone of the EUR in the spot market and suggestive of investors unwinding carry trades as concerns about Chinese growth hit hard," researchers at Rabobank found based on their analysis of the weekly Commitments of Traders Update from the US Commodity Futures Trading Commission.
Growing concerns about the global economy have pushed back expectations for the Federal Reserve to raise rates at next month's meeting.
Eroding odds
Back in March, the euro looked poised to hit parity with the greenback, buying less than $1.05 before a first-quarter slump in US economic momentum forced the Fed to abandon its mid-year lift-off plans and focus instead on the second half of the year.
Last month, the pair tested the lower end of its four-month trading range just north of $1.08, as an upbeat labor market assessment from US policymakers in the July policy statement fueled speculation about an imminent rate lift-off.
Yet meanwhile, Chinese stock markets began to sell-off amid a worsening local economic picture at the same time as authorities decided to pursue a more market-driven exchange rate and allowed the yuan to depreciate against the dollar.
Slower growth in China, a major engine of the global economy, dragged down prices of commodities, rekindling fears of another disinflationary wave, while the yuan-dollar FX adjustment further clouded the inflation outlook from the Fed's perspective.
Minutes from the Fed's July meeting showed policymakers were not yet confident that they will be able to achieve their 2% inflation mandate in the next couple of years.
"Net USD longs have edged lower. On the back of current market turmoil, speculation of a September Fed policy move is being pared back," the Rabobank analysts said.
Even though officials from the International Monetary Fund tried to dispel concerns about China on Monday, saying the economy was still on track to expand 6.8% this year, the rout in the stock markets continued.
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Another Green day for the EUR/USD and the U.S stock market is facing selloff.
EUR/USD bounced off the resistance at 1.1712 but that is probably temporary. Should the pair break above that level it will likely reach the resistance at 1.1800 visible on the monthly filter chart.
On Monday session the single currency continued its strong performance against the dollar for a fourth day. The euro recorded the most profitable session since mid-March, adding 240 pips and closed at seven-month high of 1.1616. The daily limit values were recorded at 1.1704 and 1.1369. Ongoing concerns about the global economic development and the upcoming rise in US interest rates this year helped to boost the EUR / USD. Technical attitudes are positive and next target is 1.1710.
Yesterday the EURUSD rallied once again breaking above a daily resistance at 1.1556 although closed in the middle of the daily range, signs that the bulls are losing some strength. The currency is extreme overbought and we may see a pullback to the 1.1460 level before another push upward.
EUR/USD: Fight for $1.15 Ongoing, No Weight Expected From US Data
The EUR/USD pair was seen dropping over 1% to below the $1.15 area during the London session on Tuesday, but a further decline looks unlikely as the technical outlook prefers buying dips in this area and targeting $1.16.
Later in the session, services PMI, consumer confidence and new home sales are due, but these figures are not expected to cause any significant moves as the whole focus now remains on the global risk aversion situation.
Earlier in the day, figures from Germany came out positively. The IFO business climate for August improved from 108.0 to 108.3, the current assessment ticked higher to 114.8 from 113.9 previously and the expectations gauge slightly decreased from 102.3 to 102.2, but still beat analysts' estimates.
The situation was improving on Tuesday as the PBoC stepped in and decreased the reserve requirements ratio by 50 basis points, which helped to slow down the sell-off on the stock markets. Stocks in Europe were seen advancing around 4%, while US indices futures were advancing 4% as well.
Moreover, oil was soaring on Tuesday, adding 3%, with WTI nearing the $40 resistance, which eased the pressure on commodity-linked currencies.
Markets saw further volatility during the Asian session as the Shanghai Composite declined another 7.6%, leaving the index 15% weaker in just the past two days. The Nikkei similarly fell another 3.96% despite a weakening correction in the JPY, though European equities managed to shake off global jitters following a 50bp Chinese RRR cut and the announcement of further support measures," Gennadiy Goldberg, US Strategist at TD Securities wrote on Tuesday.
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What a day it was yesterday!