Euro in roller coaster mode, GBP detached from other “riskier” currencies
Euro trading remains volatile and trading seems sideways bound. GBP seems to have detached itself from the other currencies perceived as riskier. US durable goods for the month of April slip lower.
Euro pares early morning losses but remains subdued
After reaching daily lows at 1.4013 the euro managed to recover some ground against the USD. The EZ debt concerns quelled slightly and the Euro was buoyed by Finland’s parliamentary approval of the Portuguese bailout. However the Euro remained volatile as the spectre of Greece’s financing problems kept haunting the single currency.
Yet comments by ECB officials, namely Mario Draghi and Stark, weighed substantially on the Euro and dragged it back towards the 1.4000 levels. Mario Draghi outlined the risks to the global economic growth and said that inflation, and high debt levels in particular posed a downside risk for the global growth. While stark made it clear that although Europe would emerge stronger after the debt crisis there is no certainty that events that had been experienced would not be repeated and also highlighted the enormous problems due to large public debt levels.
Resistance and support levels indicated in this morning’s Morning Briefing remain valid namely to the upside 1.4096 (the pair has found resistance at around 1.4092/1.4094 since then) beyond that at 1.4133. To the downside 1.3969 and 1.3906 remain valid.
Against the Swiss franc the Euro marked fresh new record lows at 1.2298 breaking even the 1.23 level. The EUR/CHF broke the 1.24 levels last Monday. The Euro is down more than 2% for the day so far.
Earlier Economic data today
The second reading for UK GDP remained unrevised but highlighted the struggle faced by the UK economy as data pointed towards a decline in household spending. So far for the day the GBP is up more than 3%. The GBP has unattached itself from the gloomy prospects of the other similar “riskier assets” and seems to be driven by interest rate expectations despite the unimpressive data recently.
A drop in US durable Goods orders for the month of April also helped to contribute to the already bleak scenarios for the global economic growth. The USD remains on the defensive up 0.22% against the major counterparts.
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