EUR/USD: 1.3125
Risk sentiment improved somewhat during the course of the session following the Spanish bond auction where the government sold 1 Year and 18 month bonds at which the rates were more or less double that of a year ago, but the take up was strong. This came as a relief ahead of the 10 Year auction due to take place tomorrow and 10 year Spanish yields today dropped back below 6%.
Elsewhere the German ZEW economic sentiment survey was stronger than expected and helped lift the mood on the day and the IMF was mildly more bullish about the global economy in upgrading the growth outlook, while at the same time warning that downside risks still remain.
The equity markets had a better session and the Dax and CAC both finished +2.7%, with the S+P, +1.6%. Some good earnings results from the likes of Coca Cola, Goldman and Johnson and Johnson helped the market and after the close Intel and IBM announced better than expected results, which may sustain the improved sentiment into the coming session.
The Euro joined in and having drifted off to test the 1.3090 support in Asia, then rose to its high after the European data, at 1.3172. So, as we suspected yesterday, it was a choppy session and this looks likely to be the case again today. The upside for the Euro seems rather limited, given the situation in Spain and Italy but equally there are very good bids to the downside between 1.30 and 1.31. Given the fact that all of the chart timeframes are currently showing little hint of a move in either direction I suspect that today will be a re-run of yesterday, unless we come across something to break the deadlock. There is little out of economic interest and so I suspect a rangebound session within 1.3100/1.3160 again lies ahead of us, at least in Asia.
