Euro Higher Despite Data
German unemployment data,
disappointed the markets as German ILO Unemployment rate climbed to 9.3% from
9.0% expected. The economic news was particularly confusing this
month because of statistical adjustments made to the report. Most analysts
viewed any job gains last month as “make-work†employment rather than as
organically generated demand. The euro however shrugged off the bad news and
continued to trade near Asian session highs of 1.2070. There was precious little
other news to propel buying and most markets analyst attributed the strength to
the fact that the currency held the psychologically important 1.2000 level for
several days.
Over the past four days the EUR/USD pair has been trapped
between 1.1980 — 1.2080 — one of the tightest ranges all year. Typically such
low volatility precedes a break-out, but the mind numbing range may continue a
while longer. With US economic climate unclear after the Hurricane storms of
September and the European political situation still unsettled after the German
election, the market appears to be particularly uncertain about near term
direction. Today’s US GDP numbers, unless they are materially different from
market expectations are unlikely to make much of an impact.
Meanwhile in Japan the Retail Trade data exceeded estimates
printing at 1.5% vs. 0.6% consensus. That along with further hints that BOJ may
soon move away from the ultra easy monetary policy helped the yean bit as it
firmed 112.75. In general the market is looking for a catalyst but may not find
it until next week when EU PMI and US ISM and NFP reports may offer a clearer
picture of the global economy.
Boris Schlossberg serves as Senior Currency
Strategist with Forex Capital Markets in New York, the largest retail forex
market maker in the world. He is a monthly contributor to SFO Magazine with
articles focused on understanding proper risk management, trader psychology and
true market structure. He is also a featured expert at
www.fxstreet.com and a frequent
commentator for the Marketwatch From Dow Jones Currency and Bond Report
sections.