EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR declined 0.57% against the USD and closed at 1.2975, after data showed that manufacturing activity in the Euro-zone remained in the contraction territory.
Adding to the gloom, the Italian government revised down its growth forecasts, predicting a contraction of 2.4% in 2012, from earlier forecast of 1.2% shrinkage and 0.2% contraction in 2013 from the expansion of 0.5 %. However, it added that it would still manage to balance its budget next year.
Meanwhile, in Greece, the coalition government parties failed again to agree on a major new austerity package that had been promised for this week.
In a bond auction, Spain sold €4.799 billion of ten and three year government debt, above the full targeted amount of €4.5 billion. Ten-year government bonds saw an average yield of 5.666%, down from 6.647% at a similar auction last month, while the three-year debt saw an average yield of 3.845%, up from 2.798% at a similar auction last month.
Separately, France raised €7.965 billion in a medium-term bond issue, with the interest rate on bonds with two and four year maturities fell while bonds for five years rose in the auction.
In the Euro-zone, consumer confidence declined to -25.9 in September, lowest level since May 2009. Additionally, manufacturing Purchasing Managers Index (PMI) rose to 46.0 in September, but remained in contraction territory for the 13th consecutive month. Meanwhile, services PMI fell to a seasonally adjusted 46.0 in September. In Germany, the producer price index climbed 0.5% (MoM) in August, faster than the 0.4% gain economists had forecasted. Separately, the manufacturing and services PMI rose to 47.3 and 50.6, respectively, in September. Additionally, in France, manufacturing PMI retreated unexpectedly to 42.6 in September, while the services PMI declined to 46.1 in September. Moreover, on a seasonally adjusted monthly basis, industrial new orders in Italy rose 2.9% in July.
In the Asian session, at GMT0300, the pair is trading at 1.2979, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.2920, and a fall through could take it to the next support level of 1.2861. The pair is expected to find its first resistance at 1.3038, and a rise through could take it to the next resistance level of 1.3097.
The currency pair is trading between its 20 Hr and 50 Hr moving averages.
