Fundamental Analysis, Fundamental Analysis Forex
September 20, 2012 @ 10:21 pm

Euro Continues Fall Despite Good Spanish Auction

The Euro closed the day 80 pips lower despite a good auction of Spanish debt early in the European session. Spain sold 4.8 Billion Euros of 3 and 10 year bonds, just over the 4.5 Billion target. The average yield for the 10 Year bonds stood at 5.666%. This compares to an average yield of 6.647% on its August 2 auction. This however failed to produce a long lasting rally in EUR/USD. After a short pop from 1.2971 to 1.2983, the pair fell over 50 pips in the next hour, reaching a low of 1.2929. The single currency closed the day at 1.2967. Just before the Spanish auction, a slew of European manufacturing data crossed the wires. French Flash Manufacturing PMI came in at 42.6. The expectation was for a 46.5 number, which would have been slightly higher then the previous month’s 46.0. French Services PMI also disappointed, coming in at 46.1 vs exp 49.5. Germany keeps outperforming, German data beat the expectations once again. The German Flash Manufacturing PMI came in at 47.3 vs exp 45.4. This number is also higher then the previous month’s 44.7 number. The German Services PMI also came in better then expected, at 50.6 vs exp 48.5. For the Euro area as a whole, the Manufacturing PMI came in almost on target at 46 vs exp 45.6, while its Services PMI disappointed by printing 46 vs exp 47.6. The data failed to produce big moves in EUR/USD, it was only after the Spanish auction had passed that the pair decided to move downward. Cable performed lot better then the Euro, GBP/USD closed the day only 6 pips down. Earlier in the Europe session, U.K. Retail Sales came in better then exp at -0.2%. Expectations were for a fall of -0.3%. The previous month’s number was +0.3%. Non-store retailing which mainly includes online shopping dropped by 6.7% but that fall was countered by surge in sporting goods sales. The UK’s ONS (Office for National Statistics) had this to say about the data: “feedback from stores suggests that sales were boosted by an increase in sales of football shirts with the start of the new season and the European Championship but also from increased sales as a result of the Olympics”. The Pound reacted very positively to the data, surging 15 pips after the data was released. GBP/USD reached 1.62 in around 15 minutes after the news, it was trading at 1.6181 at the time of the release. See the chart below for today’s price action in this pair. On the U.S. side of the equation, the U.S. Flash Manufacturing came in almost exactly as expected at 51.5 vs exp 51.6. The previous month’s number was revised slightly down from 51.9 to 51.5. Later in the day, the Philly Fed Manufacturing Index came in better then expected at -1.9 vs exp -4.1. The previous month’s number was -7.1. Consumer confidence came in worse then exp at -26 vs -24. The U.S. Data didn’t move the markets much. The EUR/USD opened the U.S. session at 1.2953 and closed the day at 1.2967.

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About Fx_Livermore

Fx_Livermore has over seven years experience in forex trading. He uses a mix of technical and fundamental analysis in his trading. His posts should not be taken as trading advice/recommendation to buy/sell any currency/security.

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