Euro Bounces on Rate Cut Rebuff & Berlusconi’s Pullback
The euro continues to rebound from the failed test of 1.30. The yen was the leader Monday in a day of consolidation while the US dollar rallied. Australian trade balance is the lone indicator in the Asia-Pacific region. Ashraf’s Premium Insights are due later this evening.
Two factors sparked the euro rebound in US trading. The first was chatter that the ECB will not cut rates on Thursday and could remain on the sidelines for the year. This was largely priced into markets already. The second was a report that Berlusconi has agreed not to run in the election.
Euro gains mounted after breaking through 1.3050 and the momentum led to a nearly full cent rally to 1.3122. The late December lows in the 1.3060/70 range are now the dominant feature on the short-term chart. EURUSD held up successfully above tje 1.3030 trendline support, which was signalled by Ashraf in Thursday's Pre-NFP webinar. The pair is up 80 pips since.
The lone data point was the Canadian Ivey PMI with a reading of 52.8 compared to 49.5 expected. The Canadian dollar ticked higher after the release and continued to gain as risk appetite recovered late in the day.
The lone item on the upcoming calendar is Australian trade balance at 0030 GMT. The consensus estimate is for a 2.3B deficit for the November period. A miss is unlikely to affect the market.
|Trade Balance (NOV)|
|-2,300M||-2,088M||Jan 08 0:30|
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