EUROPEAN session review: the market consolidates

Data released: 

05:45 GMT Switzerland Unemployment Rate s.a (MoM) (Sep) 3.2% 3.2% 3.2% 

06:00 GMT Germany Trade Balance s.a. (Aug) €15.6B €15.1B €15.0B 

06:00 GMT Germany Current Account n.s.a. (Aug) €9.4B €13.5B €14.2B 

06:00 GMT Germany Exports (MoM) (Aug) 1.0% 1.5% -0.8% 

06:00 GMT Germany Imports (MoM) (Aug) 0.4% 0.9% 0.3% 

07:15 GMT Switzerland Consumer Price Index (MoM) (Sep) 0.3% 0.3% -0.1% 

07:15 GMT Switzerland Consumer Price Index (YoY) (Sep) -0.1% -0.1% 0.0% 

07:15 GMT Switzerland Real Retail Sales (YoY) (Aug) 2.4% 0.7% 0.6% 

10:00 GMT DE Factory Orders s.a. (MoM) (Aug) -0.3% 1.2% -1.9% Revised from -2.7% 

10:00 GMT DE Factory Orders n.s.a. (YoY) (Aug) 3.1% 2.3% Revised from 2.0% 

The U.S. government shutdown moved into Day 8. In US, Federal Reserve Bank of Dallas President Richard Fisher said yesterday the U.S. “cannot afford to default” and that debt ceiling talks “will come down to the wire.” 

With the shutdown affect data outflow, some analysts in the market have turned their focus to how the central bank may react given the current fiscal situation. With this in mind, the release of the FOMC minutes for September due on Wednesday could give the data-starved market something to chew on. 

EURO 

The EUR may rise on evidence of modest recovery, potential for a drift up in money market rates, investors seeing light at the end of the tunnel for Eurozone banks and periphery debt, and a large current account surplus. 

EUR/USD stays on a channel line from Sep 6 at $1.3570 today, consolidatin within the narrow range. Below $1.3460 (Sep 25 low) support is around $1.3400. Above recent highs resistance is near yearly high on $1.3712. 

POUND 

The pound fell against the dollar and the euro after the British Retail Consortium said growth in retail sales slowed to 0.7% in September from 1.8% the previous month. 

GBP/USD compensated morning losses and currently holds at $1.6110. Resistance comes at $1.6140 (50%). Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs). Now support comes at $1.6000 (Sep 26 lows) with a break under widens losses to $1.5950 (Sep 24 lows). 

YEN 

The yen’s status as a safe haven has been weakened by the aggressive monetary easing undertaken by the BoJ. In addition, its safe haven appeal derived from Japan’s narrower current account surplus has also weakened. 

USD/JPY recovered from yesterday’s lows on Y96.50 (initial support) and currently holds at Y97.10. Below losses may widen to Y95.80 (Aug 8 lows). Above Y97.00 resistance comes at Y97.70 (earlier broken support line from Jun 13), then - at Y98.70 (Tuesday’s high). 

DATA PREVIEW 

At 12:30 GMT US Trade Balance (Aug) is expected. 

BoJ Monetary Policy Meeting Minutes are due at 23:50 GMT.

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