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Euro in New York

Posted by Joseph Trevisani on Sep 12, 2014 3:40:00 PM

The euro opened the U.S. market at 1.2931 within a 1.2915-1.2940 range from Asia and Europe. It had gathered support from the latest Scottish polls which showed the No vote on independence with a slight lead, though the referendum is far to close to call with large numbers of undecided voters. 

The reaction was short-lived as U.S retail sales, released at 8:30 am, provided dollar support. The headline figure at 0.6 percent for August was as forecast but July's reading was revised to 0.3 percent from flat, the ex-autos number moved up to 0.3 percent from 0.1 percent and the 'control group' which mimics the GDP consumption component  went from 0.1 percent to 0.4 percent. The euro dropped to 1.2923 but reversed immediately on short-covering and strong buying from funds, spiking  to 1.2956  within 20 minutes. 

The top was just as brief as the bottom sellers taking it down to 1.2940 within minutes, perhaps noting the rising U.S Treasury yields. The 10-year finished up 6 basis points on the day at 2.61 percent, it's first close above 2.60 percent since July 7th.

Selling pressure was contained above 1.2935 until about 9:15 am when the euro  flipped down to 1.2921, paused and then sank to the day's low at 1.2909  just about 9:30 am.

Comments from the European Central Bank's Luc Coene, Governor of the National Bank of Belgium, that the central bank welcome's the euro's decline had given the euro its final push down.  

There were good bids at 1.2900 just above the recent series of lows, (9/8 1.2882, 9/9 1.2860, 9/10 1.2884, 9/11 1.2997) and there was no attempt to break the figure and the euro made a quick recovery to 1.2947.

The S&P upgrade of Greek debt to B from B- gave the euro another ascent  to the September 10th  high of 1.2963. A short dip to 1.2951 was followed by another wave of buying which pushed all the way to 1.2979, the day's top.  The 10-year yield had faltered about this time, slipping below 2.60 percent  but it quickly recovered and  euro skidded with it back to 1.2941, closing at 1.29.53.


Chart: Bloomberg

eur min sept 12


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