The euro opened against the dollar at 1.3234 (8:00 am) just off the floor of the 1.3230-76 Asian and European range after disappointing French July industrial production (m/m -0.6% expected 0.5%, y/y -1.8%, expected -0.5%) and manufacturing (m/m -0.7%, expected 0.7%, y/y -2.5%, expected -0.5%) figure. Italian second quarter final GDP numbers were revised lower to -0.3% q/q from -0.2% and to -2.1% from -2.0% y/y. The open proved to be the low of the day.
The U.S. data at 7:30 am, the National Federation of Small Business Optimism Index is not generally a market item and the slight drop to 94.0 from 94.1 made no impact.
This left the market to contemplate the situation in Syria and the performance of equities. Developments in the Middle East seemed to indicate that no U.S. military action was imminent and news throughout the day, with Russia proposing a negotiated settlement confirmed that. Without the threat of action and reaction in Syria equities traded higher and any safe dollar flows mitigated.
Good bids in the euro crosses helped push the euro to 1.3272 but comments from ECB’s Asmussen that it was too early for the bank to exit its stimulus measures bought the euro back to just above 1.3250. The drop brought out a surge of buying that gave the euro a gradual rise to the day’s high of 1.3276 at about 2:00 pm. Just short of yesterday’s top at 1.3281 and the 21 day moving average at 1.3286.