Currency markets review, July 24

6:58 GMT France Markit Manufacturing PMI (Jul) Preliminar 49.8    48.8    48.4       

06:58 GMT France Markit Services PMI (Jul) Preliminar 48.3    47.7    47.2       

07:28 GMT Germany Markit Manufacturing PMI (Jul) Preliminar    50.3    49.4    48.6       

07:28 GMT Germany Markit Services PMI (Jul) Preliminar    52.5    50.8    50.4       

07:58 GMT EMU Markit Manufacturing PMI (Jul) Preliminar    50.1    49.2    48.8       

07:58 GMT EMU Markit PMI Composite (Jul) Preliminar    50.4    49.3    48.7       

07:58 GMT EMU Markit Services PMI (Jul) Preliminar    49.6    48.5    48.3       

08:00 GMT Italy Retail Sales s.a. (MoM) (May) 0.1%    _    -0.1%       

08:00 GMT Italy Retail Sales n.s.a (YoY) (May) -1.1%    _    -2.9%       

10:00 GMT UK CBI Industrial Trends Survey (MoM) (Jul)  -12      -12     -18

 

The dollar gained versus Europe’s shared currency after data showed sales of new U.S. homes rose more than forecast last month.

 

The USD earlier traded mixed. It rose against the JPY and the AUD but dropped against the EUR, as markets’ focus turn to economic data and earnings

 

The EUR/USD compensated Asian session losses and spiked to a fresh 1-month high of 1.3255 after Eurozone and German manufacturing PMI came in above the 50.0 expansion/contraction threshold.

 

EURO:

A manufacturing index based on a survey of purchasing managers in the euro area rose to 50.1 from 48.8 in June. Economists predicted a reading of 49.1. Better-than-expected purchasing managers’ indexes from the region spurred hopes about the economic recovery.

 

EUR/USD under $1.3200. Support extends to $1.3140 (channel line from Jul 15). Below support comes at $1.3070/60 (Jul 18 lows). Above $1.3255 (high Jun 21) resistance is at $1.3300 (Jun 6 high).

 

POUND:

Sterling fundamentals have entered an interesting period and we expect them to offer the pound decent support. The combination of a new BoE governor and early signs of economic recovery mean that UK fundamentals have entered into a fresh phase.

 

The combination of better UK data and the risk that USD strength could be delayed until late in the year suggests that for the time being cable remains a buy on dips.

 

GBP/USD retreats from yesterday’s high on $1.5390 (also Jul 22 highs and 61.8% Fibo of the $1.5750 - $1.4810 decline). Initial support remains at $1.5180 with a break lower widens losses to $1.5150 (Jul 18 lows) and $1.5080 (Jul 17 lows). Above recent highs resistance is placed at $1.5475/80 (Jun 25 high).

 

YEN:

The yen continues to drop versus the dollar Wednesday.

 

USD/JPY holds at Y100.26 and targets Y100.50 (Jul 15 highs), then - at Y101.00 and Y101.50 (Jul 7 highs). Channel support line from Jun 13 at Y99.40 with a break under widens losses to Y98.20 (Jul 11 lows).

 

DATA AHEAD:

Thursday’s first release is due to come at 06:00 GMT when UK reports Jul Nationwide Housing Prices.

At 08:00 GMT Germany issues Jul IFO - Current Assessment, Business Climate and Expectations figures.

At 08:30 GMT the focus will be at UK Q2 preliminary GDP data.

US data at 12:30 GMT include Jun Durable Goods Orders (0.5% expected vs 3.6%) and Initial Jobless Claims.

At 23:30 GMT Japan Jul inflation data is schedule to release.

 

 

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