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The Calm before the Calm: New York Euro Summary

Posted by Joseph Trevisani on Jul 30, 2013 4:58:00 PM

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The euro opened the American session at 1.3291 (8:00 am) having traded from 1.3248 in Tokyo  to 1.3302 in London since the value date change yesterday at 5:00 pm in New York.

The greenback initially scored well, with the euro dropping from the London and day's high  at 7:42 am a few minutes before the NY open, to the day's low at 1.3235  by 10:25 am. The run was aided by strong gains in U.S. residential housing prices in the Case-Shiller Home Price Index which was up 12.17 percent in May. It was the third month in a row of 10 percent or more years on year price increases.  Consumer confidence was also strong. Though the sentiment index from the Conference Board was down to 80.3 in July from 82.1, it was the second highest reading since the end of the recession in June 2009, May's being the highest.

The euro recovered into mid-day as news reports downplayed the likelihood of a major announcement in President's Obama's economic speech. Speculation had centered on an overseas tax holiday for American corporations permitting them to repatriate profits and increase the demand for dollars. In the event the speech did not contain such a proposal.

Euro rallied to 1.3271 as London closed at noon, but dipped back to 1.3246 in the middle of the afternoon and then rallied once more to 1.3271 before closing at 1.3263.

The Federal Reserve rate policy meeting of the open market committee (FOMC) will issue its statement at 2:00 pm tomorrow, followed by Chairman Bernanke's news conference at 2:30 pm. No change is expected on rates but the Fed has given hints that its forward guidance on rates, quantitative easing or both may change.

Until the Fed and its Chairman have spoken currency markets are unlikely to do much more than wait.

Joseph Trevisani

Chief Market Strategist


Charts: Bloomberg

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