US session review: Euro drops to 3-month low

Data released (actual, consensus, previous):                

12:15 GMT Canada Housing Starts s.a (YoY) (Jun) 199.6K    187.0K    204.6K

The euro slid to a three-month low against the dollar after an official at the European Central Bank signaled it would remain accommodative for more than a year, further diverging from policy in the U.S.

On Tuesday, investors welcomed an agreement from euro-zone finance ministers to disburse 3 billion euros ($3.86 billion) in aid to Greece on condition the country meets the goals laid out under the second international bailout.

In NY the euro was back around lows after S&P lowered Italy’s credit rating to BBB from BBB+. S&P also left their outlook at negative, meaning there is at least one-in-three chance that the rating could be lowered again in 2013 or 2014.

EURO:

Later, however, the euro retreated after the International Monetary Fund slashed its global growth forecast.

The International Monetary Fund trimmed its estimate on global growth to 3.1% this year, down from its 3.3% forecast in April. For the 2014, the fund sees global growth of 3.8%, also down 0.2% from the previous estimate.

More specifically, the IMF slashed its growth projection for Spain in 2014 to 0%, down from an earlier estimate of 0.7% expansion.

EUR/USD fell as low as $1.2780/75 and remains under pressure. Below losses widen to $1.2745 (Apr 24 lows) and $1.2660 (Dec 13’2012 lows). Initial resistance is near $1.2890/00 (daily highs), then - at $1.3030 (high Jul.3) and $1.3080 (high Jul.2).

POUND:

The pound remained under pressure after weaker then expected data. Industrial production showed zero growth in May despite of forecasts 0.2% increasing. Also data showed wider then it was expected Trade balance deficit.

GBP/USD challenged $1.4810 before recovered a bit. Below support comes at $1.4780 (Feb 28’2010 lows) and $1.4720. Initial resistance is near $1.4980 (daily highs), above - at $1.5020 (Friday’s Asia higihs), then - at $1.5130 (Jul 3 lows).

YEN:

The yen remained under pressure amid an optimism Prime Minister Shinzo Abe will push through economic reforms after winning upper house elections on July 21.

USD/JPY consolidates around Y101.00. Support comes at Y99.90 (Friday’s low) and Y99.50 (Jul 4 low). Resistance is around  Y101.50, above - near Y102.70 (channel line from Jun 14), then - at Y103.70 (May 22 high).

DATA AHEAD:

At 23:50 GMT Japan May Tertiary Industry Index comes.