For many moons Digital Markets Advisor has believed that the EUR has been over valued. While there are many reasons why this is the case, the value of money is often based on perspective and inherent conditions relative to other currencies that are prevalent on the FX market. The Single Currency as of this morning continues to test one year low support ratios. But how low can the EUR go?
The ECB is under the microscope this summer due to recent pronouncements by Mario Draghi and data coming from member nations. Germany turned in lacklustre GfK Consumer Climate marks already this morning. Tomorrow more inflation numbers will come from Germany. Also helping the EUR lose value are murmurs from the dark corners within the Federal Reserve that indicates the U.S. Central Bank is considering tightening policy sooner rather than later. However cynics are in abundance who point out that economic statistics continue to offer only mixed results. While the Durable Goods Orders from the States proved powerfully stronger yesterday with a gain of 22.6%, the Core Durable Goods Orders came in negative with a minus -0.8%. And on top of this housing sector reports remain challenging.
The GBP which has been taken lower in recent weeks is still within a strong range versus the USD. The fact that the BoE and U.K. government are looked at as being quite active if not hawkish regarding fiscal policies. It should be noted that the U.K. is not out of the woods economically either and recent GDP marks have not been good, on top of that weakness in the housing market continues outside of London.
Gold has found some footing the past couple of trading sessions. The precious metal is near 1285.00 USD as of this writing. Gold has been within the clutch of bears for two years and with inflation remaining nearly non-existent it stands to reason that ranges will remain those based on support levels more than resistance.
Traders need to remain vigilant to the fact that lower volumes continue to be seen in the broad markets. Yesterday’s results in the equity markets have been rather cautious, but with summer trading likely to continue for the next ten days the low amount of volume – meaning the absence of large financial institutions as major actors – may constitute room for sudden gyrations that do not make the greatest amount of common sense.
Tomorrow the States will release Preliminary GDP figures and this could prove of interest.