Coming Up Today (all times GMT)

  • CAD Core Retail Sales m/m (12:30)
  • USD Existing Home Sales (14:00)

Monday, the wave of merger activities in the US failed to restore confidence among market participants. Worried by a double-dip scenario, investors continued to exit stock markets for the refuge of low-yielding Treasury bonds. This weighted heavily on the euro and the British pound, which retreated further against the greenback and the yen.

It seems that investors remain extremely cautious, ahead of the release today in the US of the report on existing home sales. The number of transactions is expected to fall 12% for July, to 4.68 million units, on the back of lower demand due to the expiration of the home buyer tax credits.


According to PMI flash estimates, business activity in the euro area slowed down slightly in August. The composite index, which aggregates activity in manufacturing and service sector, fell in August to 56.1 versus 56.7 in July. The report underlined that the recovery is mainly driven by France and Germany, adding fears that the rest of the Eurozone could face stagnation. As such, the decline of the euro continued, with selling pressures driving the common currency to a session low of 1.2630.



Risk aversion continued to drag the pound slightly lower against the dollar. The GBPUSD broke below the psychological level of 1.5500, after reaching a session high of 1.5620. It now remains to be seen whether the pound suffers from temporary downside pressure due to adverse market conditions, or if market sentiment has changed negatively towards the sterling, in a defiant stance towards Europe recovery.



Yesterday, hopes for currency intervention to slow the yen's strength were dismissed. Japanese Prime Minister and the Governor of the Bank of Japan finally decided to hold their emergency meeting through a phone conversation, showing that rhetoric was still the main policy. As such, the purchases of safe-haven yen restarted and USDJPY traded close to 15-year lows, at around 85.00.

Support/Resistance: 84.90 /85.50