EUR-USD found support ahead of 1.4200 bids after an earlier downward drift, prompted by the much weaker than expected German retail sales figure and by the European interbank desk selling into Asia session gains that saw the pair log a high of 1.4308. An Asian central bank had earlier been reported selling EUR-USD too. The backdrop of risk appetite should crimp the USD's potential, however. Signs flagging investor appetite for U.S. government paper at last week's record-level auctions and PIMCO's McCulley forecast that the Fed will not raise rates until 2011 (which gained some attention on newswires and in markets) are added USD negatives, despite improving U.S. economic data and the associated cautiously optimistic tone of American policymakers. Focus later falls on a busy U.S. economic calendar, with ISM manufacturing, vehicle sales and construction spending all due, and expected to collectively show further signs of improving economic conditions.
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