BUZZ-COMMENT-US recap: EUR / USD down after weak German data, growth anxiety

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October 25 (Reuters)The dollar appreciated against the euro, yen and Swiss franc after an early sell-off that maintained key support, and concerns about Germany and the eurozone’s recovery increased after a fourth decline consecutive monthly Ifo business climate index and the Bundesbank’s warning that Germany’s growth in 2021 is likely to be “significantly” below its 3.7% forecast for June.

Despite rising German inflation, Bund yields fell, perhaps partly reflecting comments by ECB chief economist Philip Lane last week that market expectations for rates were Future interest does not match the European Central Bank’s forecast not to increase until inflation is stable at 2%.

No substantial policy changes are expected from Thursday’s ECB meeting. Clues about what will happen after the Pandemic Emergency Purchase Program (PEPP) ends will be monitored, along with any changes in the political bias of delaying an overt tightening.

EUR / USD fell 0.32% after early rebound to 1.16655 on EBS was softened by last week’s highs and Fibo 38.2% from September-October decline at 1.1670. Bearish news from Germany unlocked sales below the previous four-day lows and the 10- and 21-day moving averages converged at 1.1605-10. A close below these MA would strengthen failed bearish attempts to break through the 38.2% Fibo hurdle.

GBP / USD gained 0.1% as it continued to consolidate below 50% Fibo from the June-September decline and 200-DMA at 1.3831 / 51.

Gilts and the pound yields were checked by Bank of England interest rate fixer Silvana Tenreyro, saying she needed more time to judge the impact of the end of the regime. the government leaves the job market, adding to signs that it sees no urgency to raise rates.

This view could delay the BOE’s first rate hike from November to December. It also comes as some fear that more than 1% of the BOE’s rate hikes planned by the end of 2022, despite the end of BOE asset purchases and tightening fiscal policy, could be more. than necessary to control inflation, especially if it is transient, and could hurt growth.

USD / JPY gained 0.19%, but larger early gains amid rising stocks that dampened demand for the safe haven yen, faced sellers by 10-DMA and tenkan day-to-day. A decent drop in Treasury yields on Monday came after JGB yields surged overnight, allowing 5-year Treasury-JGB spreads to drop to their lowest since October 18, weighing on the market. USD / JPY.

USD / JPY’s pullback of 113.915 on EBS then found support by the uptrend line started with the Fed’s September 22 meeting low last at 113.53. A close below this line would pave the way for a wider correction of the overbought rally that drew huge long speculation last week.

AUD / USD and many other higher beta currency pairs have improved amid higher risk acceptance and higher commodity prices.

Ether and bitcoin gained 2.5% and 3.4% respectively, getting additional traction from a report Mastercard is putting together for the use of crypto services.

BOC, BOJ and ECB meetings are scheduled for Wednesday and Thursday, along with major inflation and GDP reports

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(Edited by Terence Gabriel Randolph Donney is a Reuters market analyst. The opinions expressed are his own.)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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