Euro Open: US Dollar Steady To Start The Trading Week

Daily Forex Fundamentals | Written by DailyFX | Aug 11 08 06:14 GMT |

The docket was nearly empty overnight, with a small helping of Australian and New Zealand data failing to stir price action. A wealth of releases is scheduled in European trading hours. On balance, forex traders are likely to see the economic news take a back seat to a relief rally in the majors as the markets digest last week's impressive surge in US dollar strength. The escalating conflict in Georgia may prove to be a wildcard: the greenback tends to attract capital at times of geopolitical tension because the US remains the dominant global military power. Key Overnight Developments Australian, New Zealand Data Goes Unnoticed US Dollar Tries Higher, Then Retreats to Friday's Levels Critical Levels The Euro inched higher towards 1.50 overnight having dropped as low 1.4902 in early Asian trading. DailyFX Chief Strategist Jamie Saettele expects the Euro to decline as low as 1.4668. Near-term support stands at 1.4884, with resistance at 1.5175. Sterling mirrored Euro price action, dropping as low as 1.9104 only to return to just below the 1.92 mark. Support is now at 1.9082, with resistance at 1.9337. Asia Session Highlights The docket was nearly empty overnight, with a small helping of Australian and New Zealand data failing to stir price action. QV House Prices declined -2.2% in July, a record low and the first negative reading since the metric's advent. The RBA's Quarterly Monetary Policy Statement offered nothing different from the rhetoric seen in the statement accompanying last week's rate decision. Euro Session: What to Expect A wealth of data is scheduled for release in European trading hours. For the Euro Zone, the pace of growth in German Wholesale Prices is expected to slowdown in July as the collapse in crude oil enters into the metric's calculation. The same considerations may see a downward revision in the final print for Italy's July Consumer Price Index. Traders are likely to see a bit of an improvement in June's French Industrial Production as analogous metrics for Italy and Germany released last week saw the pace of decline moderate in the same period. Importantly, these improvements pale in comparison to the magnitude of the drop in industrial production for the EZ's top 3 economies in recent months. The likely scenario is that firms aggressively cut production in May and June to clear inventories. Having completed the adjustment, production growth can resume, albeit at a very modest pace to account for new, lower levels of demand. In the UK, July's Producer Price Index is expected to see input price growth moderate while output price growth advances further. Put simply, the forecast predicts that goods were cheaper to make in July than in the preceding month, but the savings were not passed on to the consumer by way of a lower price for the finished product. This may reflect firms' desire to cover previously incurred losses from sagging demand as well as a reluctance to believe that the bullish trend in crude is over. June's Trade Balance is expected to issue a slightly smaller deficit that of May as waning consumer spending sees lower import volumes. Indeed, Retail Sales dropped a whopping -3.9% in June. On balance, forex traders are likely to see the economic news take a back seat to a relief rally in the majors as the markets digest last week's impressive surge in US dollar strength. The escalating conflict in Georgia may prove to be a wildcard: the greenback tends to attract capital at times of geopolitical tension because the US remains the dominant global military power. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. 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