EUR/USD: 1.2510The Euro was unable to maintain the gains of the previous sessions and fell to 1.2480 before bouncing around, within the range, above 1.2500 for the balance of the day on Friday. The soft Durable Goods Orders, further raising the prospect of QE3, did not help the dollar and saw it bounce from the 1.2480 low, to as high of 1.2561, before settling down for the weekend.
Conflicting speculation as to whether Ben Bernanke will or will not announce some economic stimulus at Jackson Hole on Friday kept the Euro below the recent highs, although a letter from him to Congress, outlining the case for a possible application of QE3 gave the risk currencies a boost. The downside was limited after rumours resurfaced that the ECB is preparing some form of program to set target bands on the yields of peripheral EU bond markets, in an attempt to lower the costs of Spain and Italy.
Elsewhere in the EU, the discussions between Samaras, Merkel and Hollande have concluded, but with little evidence of progress, and it will be mid September before we see any outcome , once the Troika have reported their findings.. The German Finance Minister suggested that it may be possible to have a temporary Greek exit from the EU while it fixes up its economic issues....which sounds like just delaying the inevitable....
All up, the picture remains pretty confused and I don't think we are going anywhere too far while the current conditions exist, at least before
Fridays symposium at Jackson Hole.
Technically, not a whole lot has changed. Although we have briefly been to 1.2589, the resistance remains strong with the 100DMA currently at 1.2605 and then the long term channel resistance at 1.2655 and above that, 1.2720 is 23.6% of 1.4935/1.2042. These levels may get a nudge after Fridays speeches by Bernanke and Draghi, but not before. Bernanke has been getting all the press with regards to the upcoming symposium, but keep an eye on Draghi, who could spring a surprise of his own if can report some positive progress on how the ECB intend to lower the borrowing costs of Italy and Spain.
The downside, having tested 1.2480, now looks to this to act as minor support, below which 1.2392 (50% pivot of 1.2742/1.2042) comes into play, above the channel base at 1.2340 and which currently looks a long way off.
It should be relatively quiet on Monday with little data out and London closed, and all eyes will look to Jackson Hole later in the week. Until then don't look for too much excitement. I think Bernanke will speak at 10.00am NY time, with Draghi on at 12.30pm....It will be a hectic Friday afternoon as positions get set before the US Labor day long w/e next Monday. Be very flexible late into Fridays session.
Economic Data this week includes:
M: China Leading Economic Index, German IFO,
T: German Consumer Confidence, Spain GDP, US Consumer Confidence, Case Schiller US House Prices
W: German CPI, US GDP, Beige Book
T: German Unemployment, , EU Business Climate, US Personal Consumption
F :German Retail sales, EU Unemployment, Bernanke/Draghi- Jackson Hole.
