EUR/USD at first wallowed somewhat at the 1.20 zone, which had been reached Thursday night, but then took a dive to the 1.1930 zone, ahead of fresh US data. The US eco data started with the less influential housing starts. These ticked up above the 2000K level, but couldn't provoke more dollar upside. Fed Broaddus comments indicating that the Fed was still some way off from seeing the conditions for a rate hike couldn't have helped dollar sentiment at around that time. The US industrial production, falling by 0.2%, then dampened $ sentiment. A further hit came with the Michigan consumer sentiment unexpectedly falling back. These data pushed the EUR/USD pair back up to the 1.20 mark for intraday highs, only to fall back somewhat to the 1.1980 zone at the closing bell. Today could well become a day of transition, awaiting Wednesday's Greenspan testimony, in which he could give clear indications regarding monetary policy. The market may well start to fear a more dovish Fed approach, awaiting more confirmation from the jobs front first, before altering course for rate hikes. In such a scenario, look for some upticks in EUR/USD for the very short-term trading pattern, as the market may scale back rate hike hopes for the near term.
ČSOB Investment Research