EURUSD – so far, so good

Lack of bad news seems to be a good news, at least for the markets that bought assurances from a Sarkozy-Merkel duo. Yesterday the EURUSD broke a relatively strong resistance at 1,3690 and surged above 1,38, pulling equities and commodities along. Reuters informed about some barrier options that were activated above 1,37 and cited it as the main driver behind the move and in fact it was hard to find other credible reason. With the market moving that fast we might be eyeing 1,3940 but caution is required – the fundamentals behind the rally are fragile. It will be interesting to see how this sentiment is affected by the first “real” (read: really important) quarterly results that we are going to get today from JP Morgan (7.00 ET) and Google (after the final bell).

Chinese surplus down

Chinese trade surplus fell to 14,5 bln USD in September from 17,8 bln in August and as much as 31,5 bln in July. However, the volumes are more interesting: exports rose by 17,1 and import by 20,9% on the annual basis. While those numbers might still look impressive, they are short of those recorded in August (24,5 and 30,2% respectively) and expected on the market. The data reminds us that we are in a slowdown (after a series of better than expected US readings). Coincidentally, the IMF cut the growth forecasts for Asia and warned about a negative impact of the European crisis. 

AUDUSD – employment above expectations

Employment in Australia increased by 20,4k in September and the unemployment rate fell from 5,3 to 5,2% - in both cases positively surprising the markets (the consensus saw +10k and 5,3% respectively). The data takes some pressure off the RBA to ease instantly but does not remove it altogether – investors still see interest rate cuts in the pipeline.

The data is AUD positive but one needs to look at the pair in a broader context. The Aussie recovered strongly since last Tuesday (which we underlined few times, including last Fridayhttp://www.xtb.com/analysis-research/market-analysis/223096) and actually achieved the target of 1,02. Therefore, despite the data, the room for further advances seems to be limited. One might notice that the pair is in the mid-term declining channel and an upper limit of that channel runs through 1,0350 atm.

Przemysław Kwiecień PhD, Chief Economist

Investment risk warning
X-Trade Brokers Dom Maklerski S.A. does not take responsibility for investment decisions made under the influence of the information published on this website. None of the published information can be treated as a recommendation, disposition, promise, or guarantee that the investor will achieve a profit or will minimize risk using the information published on this website. Transactions including investment instruments, especially derivatives using leverage, are in its nature speculative and can provide both profits and losses that can exceed the initial deposit engaged by the investor. more