Fundamental Headlines
• Fed Comments Curb Euro’s Gains– Wall Street Journal
• Economic Benefits’ From Bank Regulation – Wall Street Journal
• Geithner Calls for Housing Finance Reform - Financial Times
• China Doubles Korean Bond Holdings as Central Bank Switches From U.S. Debt - Bloomberg
• Germany Ignores Soros as Exports Drive Record Growth at Consumers’ Expense - Bloomberg
GBP/USD: The Bank of England released their minutes for the month of August, and the decision to keep rates unchanged at 0.50 percent was not unanimous for a third consecutive month. Andrew Sentance was again the lone dissenter, calling for a rate increase of 25 basis points to 0.75 percent. Meanwhile, the BoE said that they saw risks that inflation expectations may be deanchored, and went onto note that credit conditions seem set to stay tight for longer. In the currency markets, GBPUSD price action remains capped by the 200-day moving average. GBP traders will now shift their focus to the retail sales report which will be released tomorrow.
EUR/USD: Construction output in the 16 member euro area advanced 2.7 percent in June after falling 0.7 percent the previous month, marking the highest level since March. At the same time, annualized figures jumped 13.0 percent, the European Union’s statistics office in Luxembourg said today. Taking a look at the breakdown of the report, Romania illustrated the largest construction output gain for the bloc, climbing 16.5 percent, and was followed by a 7.2 percent rise in Spain. This reading is of particular interest in that it suggests that increased construction suggests a growing economy as it reflects business and consumer optimism. Meanwhile, in the currency markets, the EURUSD is displaying a lackluster performance going into the North American trade. However, the 10-day SMA has crossed over below the 20-day moving average, which is indicative of further declines. Main support and resistance levels appear at 1.2982 and 1.2755. To discuss this and other reports, please visit the EUR/USD forum.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
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