The Euro and the British Pound pulled back from the highs seen in US trading as risk appetite rebounded following US authorities’ rescue of Citigroup Inc. Grim European fundamentals are unlikely to stir prices in the upcoming session, with forex traders looking ahead to the implications of the US GDP release.
The Euro pulled aback from the US affair top at 1.2948 in abrupt trading, bottomward beneath the 1.29 mark to analysis resistance-turned-support at 1.2809, the 11/19 high. The British Pound followed suit, testing the 1.51 level. Both European currencies raced college bygone as accident appetence rebounded afterwards US authorities stepped in to accomplishment cyberbanking behemothic Citigroup Inc.
Signs of global economic slowdown were clearly on display in the economic releases out in Asian trading hours. Japan’s Corporate Service Price index registered at -1.4% in October, the worst reading in over 5 years.
New Zealand’s 2-Year Inflation Expectation predicted annualized inflation would slow to 2.8% looking one year ahead from the fourth quarter, the first decline in 18 months. The metric predicted consumer prices would slow to 0.5% in the three months through December, the lowest in over a year. Still, traders are pricing in a 1.25% rate cut from the Reserve Bank of New Zealand at the bank’s next meeting and a total of 225 basis points in cuts over the next 12 months.
On balance, the forex market is likely to continue to eschew fundamental considerations as risk appetite rebounds, battering the greenback. A very strong showing on Wall St has carried over into overnight trading with key Asian bourses up over 4% and US index futures in positive territory. Investors’ exuberance may be fleeting however as the US GDP report threatens to show the world’s largest economy did worse than originally expected in the third quarter, shrinking -0.5% versus early estimates at -0.3%.
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