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Forex: New York Euro Summary

Posted by Joseph Trevisani on Oct 15, 2013 4:30:00 PM

The euro began New York trading at 1.3487, near the bottom of its European range as stops below 1.3550 activated following the German October Zew survey.  The survey split with the 'current situation' reading weaker than the median forecast, 29.7 vs. 31.0 and the 'economic sentiment' gauge improving at 52.8 vs. 49.6.

As for most of the past month as the U.S. budget dispute has intensified, traders were watching developments in Washington rather than economic statistics. A weak Empire State Manufacturing Survey for October, 1.52 vs 7.0 elicited no response. The survey is one of the regional polls of the Institute for Supply Management which can provide clues for the national survey which will be released on Friday November 1st.

Instead market attention and reaction was focused on statements from the participants in the budget and debt negotiations in Washington.  First to hit was Senate Majority Leader Harry Reid who said he believed that a deal was progressing and he was confident of a comprehensive deal this week, giving the dollar a boost to 1.3481.

House Speaker John Boehner then followed saying that the House would issue their own plan for the Senate to consider.  Senator Reid replied in his usual unadorned, agressive style, calling it a waste of time and claiming the House was trying to torpedo Senate negotiations. This led to a short euro rally to 1.3509.

Markets have an almost uniform belief that the debt limit will be increased before October 17th when the Treasury Department has said the government will run of of money to pay all of its bills.

The euro consolidated around 1.3500 in the afternoon but reports that talks has been broken off, spiked the euro to 1.3533. But then other reports that the talks were only stalled  dropped the pair back to 1.3520 where it closed.


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