Coming up at 7:01 …
EUR/USD finding support at 200 hour moving average
Earlier this afternoon Standard & Poor’ said that it would be reviewing the credit ratings of several Euro member countries, including Germany, for possible downgrades. The Euro remained stable following the news, still trading around the 1.3400 handle; the market doesn’t seem to be surprised by bad news anymore. Many are expecting the ECB to cut rates 25 basis points on Thursday morning with the possibility of also softening collateral rules for the banks. Moral was also boosted on Monday by the announcement made by France and Germany on an agreement to impose budgetary discipline across the region as the quest continues to find a solution to the debt crisis.
Hong Kong purchasing managers index 48.7 vs. a 49.0 reading in October.
This is the fourth consecutive month that conditions have deteriorated in Hong Kong; fell at the third sharpest rate in 2 1/2 years. Output prices have reduced in an effort to thwart a contraction in demand and stimulate sales as input prices continued to rise. HSBC Economist, Donna Kwok, commented ” While business activity in Hong Kong is still slowing, it hasn’t collapsed”.
No direction so far…
We haven’t seen any direction in the market thus far as the Nikkei looks like it will open slightly higher. It looks like the Euro will be comment driven this week leading up to the European Union summit; markets are hopeful that the EU will take some steps forward leading up to Friday. There is pressure on the ECB to cute rates on Thursday, or at least implement more sovereign debt purchases.
The EUR/USD is receiving support from the 500 minute moving average as it grinds lower.
Aussie company operating profits (q/q) 4.8%; better than expected.
Australian inflation gauge (m/m) -0.1%; worse than expected.
The market had a limited reaction to the release.
Australian AIG services index 47.7; worse than the 48.8 prior reading.
Euro continues to edge higher
It seems that investors woes have been subdued (for now) after the world’s major central banks agreed to offer cheap dollar loans for European banks down on their luck. This move has also decreased the cost of interbank lending for the first time since July 22nd. The recent firmness is the Euro seems to have been caused by relatively successful Spanish and French debt auctions, with the EUR/USD reaching a high of 1.3521 following the auctions.
Currently the pair is testing some upward hourly trend line support as we wait for the Nikkei to open in a little over thirty minutes (looks to open flat). Tonight may be relatively quiet with the U.S. non-farm payroll number out tomorrow morning.
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