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The Euro fell to as low as 1.3089 during overnight trading and with markets closed for the Good Friday holiday, has since consolidated above 1.3100. French CPI and industrial production were the only fundamental releases on the day and both continue to show further deterioration in the economy.
• Japanese Yen: Consolidating Near 100.40
• Pound: 100-Day SMA Remains Supportive
• Euro: French Inflation and Industrial Production Sink Further
• US Dollar: Markets Closed For Good Friday
Euro, Pound Flat on Holiday Volume, After Losing Ground During Asian Trading
The Euro fell to as low as 1.3089 during overnight trading and with markets closed for the Good Friday holiday, has since consolidated above 1.3100. French CPI and industrial production were the only fundamental releases on the day and both continue to show further deterioration in the economy. The Euro-zone's second largest economy saw activity fall for a sixth month by 0.5% which brought the year-over-year decline to -15.5%. On the bright side the monthly decline was better than the 0.1% that economist were expecting which could be a sign that the economy is beginning to stabilize. Meanwhile, inflation for the county slowed to 0.3% which was more than the 0.4% that was forecasted and the lowest since 2000. Prices continuing to fall have weakened the ECB argument that the region isn't at risk for deflation. Nevertheless, the central bank is expected to start non-standard measures at their next policy meeting
The pound has seen some price action considering the Holiday as it fell to as low as 1.4623 after reaching as high as 1.4674. The 100-Day SMA continues to serve as support at 1.4559 and as long as it remains above that level a bullish case can be made. The GBP/USD has been pressured by broader dollar support, but saw significant gains against the Euro yesterday after the BoE held their benchmark rate at 0.50% and didn't announce any new quantitative easing measures. The central bank said that it would take the next two months to execute their initial purchase program which should lesson fears that they wil increase their efforts. Therefore, we could see sterling support continue
The dollar gained against most currencies during Asian trading but with European and U.S. markets closed price action has come to a stand still. The bullish greenback sentiment is some what surprising given the soaring equity markets as risk appetite has been negatively correlated to the greenback over the past six months. Therefore, you have to ask is the demand for U.S. risky assets reached a level where it is offsetting the outflows from treasuries and will this continue. We maybe seeing traders betting that he U.S. economy will be the first to emerge from the current crisis, which could continue to add dollar support. Next week's continuation of earnings season and a full economic calendar could spark considerable volatility as markets will use the data to confirm their theories.
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To discuss this report contact John Rivera Currency Analyst: firstname.lastname@example.org