Euro Stalls Ahead of Highs

Market Drivers January 03, 2018

GE Unemployment beats

UK PMI Construction misses forecast

Nikkei -0.08% Dax +0.37%

Oil $60/bbl

Gold $1314/oz.

Bitcoin $14800

Europe and Asia:

EUR EZ GE Unemployment -29K vs. -13K

GBP UK PMI Construction 52.2 vs. 53.0

North America

USD ISM Manufcaturing 10:00

USD Fed Meeting Notes 14:00

FX markets were generally steady in Asian and early European trade today, the strong run seen in the euro and sterling yesterday came to a screeching halt as both pairs ran into a wall of sellers.

EURUSD could not push past 1.2060 as the fresh multi-year highs remained tantalizingly out of reach for euro bulls despite strong economic data from the region. In Germany unemployment hit new record lows and CPI price inched higher, but no avail as the pair faded back to 1.2010 by morning North American trade.

The 1.2000 level will now set up as a big battle between longs and shorts as a failure to hold here would suggest a failed double top in the pair and lead the way for steeper correction.

In UK the PMI Construction data just missed its forecast at 52.2 versus 53.0 but nevertheless showed that the housing sector remained strong. According to Markit, "Survey respondents indicated that house building remained a key engine of growth, with residential work expanding for the sixteenth consecutive month in December. In contrast, latest data indicated a moderate fall in commercial construction, thereby continuing the downward trend seen since July. Civil engineering work stabilized during the latest survey period, which ended a three-month period of decline."

Still, cable wobbled as well trading back to the 1.3560 level as focus shifted back to Brexit negotiations. There were some reports the UK may be considering joining the TPP pact, but China chimed in that such a move would be premature.

All this weakness occurred without the concomitant dollar strength Despite 10-year yields rising to 2.46% USDJPY was flat to lower at 112.25. Today the market will get a look at ISM Manufacturing and Fed minutes. The data is expected to be slightly lower but still near the recent range highs. If however, ISM Manufacturing shows a bigger than expected drop USDJPY could quickly fall below the 112.00 figure given the lack of enthusiasm for the buck the FX market now. Traders continue to view Fed actions with caution and any dip in the data would only strengthen that bias today.

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

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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Boris Schlossberg

Mr. Schlossberg is a regular contributor to CNBC's Squawk Box and a commentator for CNBC Asia and CNBC Europe. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Mr. Schlossberg has written for SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is the author of Technical Analysis of the Currency Market and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game, both of which are published by Wiley

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