Intraday Market Thoughts

Euro Holds on to Gains on German, French GDPs

by Ashraf Laidi
May 13, 2011 8:28

EURUSD is getting a much needed boost from higher than expected French & German Q! GDPs, which rose well above Q4 & consensus. Sterling remaining under pressure after the NIESR dampened the mood with its latest forecast.

France Q1 GDP rose 1% q/q (vs exp 0.6%), posting the biggest growth since Q2 2006, following 0.3% in Q4. German Q1 GDP rose 1.5% q/q from 0.4% in Q4, exceeding markets expectations of 0.9%

Yesterdays failure of EURUSD to close above the 55 day MA keeps the bias slightly euro negative in the short term, but as was argued in our Premium piece, there is the need for EURUSD to close this week above the 55 dma.

Here is a SAMPLE of CHARTS from yesterdays premium piece arguing the IMPORTANCE of closing above this key tech level

GBPUSD remains under pressure after NIESR said that economic growth had slipped to 0.3% for the three months to April, yet, they they did say they didnt expect a double dip recession & warned, along with the IMF, that growth was likely to remain constrained by the governments austerity measures, and the high debt levels in the UK economy. A fall below trend line support below 1.6235 against the dollar could well see further losses towards 1.6180.

The not so unexpected hike in Chinese bank reserve requirements yesterday saw a sharp sell off in commodities initially before a sharp rebound later in the afternoon with silver rebounding off trend line support at $32.10 from the August lows at $17.70. A surprise hold in rates by the Bank of Korea on the back of recent softer food prices surprised the markets but looks merely to have served to push the decision out until June.

Oil also pulled back from key support around the $95 despite the IEA revising down its oil consumption estimates for 2011 on the back of weaker demand caused by increased prices. Gold also managed to recover after also testing key trend line support at $1,480 from this years lows at $1,308.50. Despite these sharp pullbacks the Reuters CRB has been unable to close back above its 100 day MA at $347, and could well be on course to test back towards its 200 day MA at $320.

More in depth analysis on all these topics can be found in out Premium section -

By KM Staff


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