EUR/USD Shrugs off Poor Germany Ifo Reading

Market Overview | Written by ActionForex.com | Nov 24 08 11:01 GMT |

EUR/USD shrugs off another poor reading in the Germany Ifo and remains firm in tight range. The main Business Climate Index dropped to new 16 year low of 85.8 in Nov, much worse than expectation of 88.7. The fall was driven by deterioration in both Current Situation Component, which dropped from 99.9 to 94.8 and Business Expectations Component, which fell from 81.4 to 77.6. All industry components, trade & industry, manufacturing, construction, wholesaling, retailing deteriorated deeper into negative region. There deterioration in business outlook in Germany, the largest economy in the Eurozone is fueling increased speculations that ECB will have another deep cut in Dec, by 75bps or even 100bps. Other data from Eurozone saw current account deficit of EUR 10.6B in September, down from a deficit of EUR 5.3B in August, as goods deficits widened and service surplus lowered. From US, existing home sales are expected to fall back to 5.05M annualized rate in Oct after the surprised jump to 5.18M in September. Note that the 3-month, 6-month, 12-month average in Sep was 5.04m, 4.97m and 4.97m respectively. Any figure above 5m will be supportive to the view that sales are stabilizing as price falls. Also, markets will be keening awaiting stock markets' reaction to the news of bailout of Citigroup as well as Obama's job stimulus plan. President-Elect Obama's announcement of appointing NY Fed Geithner as the next Treasury and the plan to create 2.5m jobs. US Government's announced bailout plan to protect the "unusually large" loses on Citi's $306 billion in mortgage-backed assets and $20b injection into the bank from TARP by buying preferred shares of the company. Technical Briefing No change in the outlook in major pairs and crosses as they're all staying in tight range. Note that dollar index tries to draw some support from 4 hours 55 EMA for a rebound but fails to sustain gain. While some more pull back might be seen, near term focus remains on 86.14 minor support and as long as this support holds, further rally is still in favor. Elsewhere, note that the rally in Gold and Silver, which reaches as high as 820.20 and 9.97, is quite impressive, and more gain there will likely trigger further pull back in the greenback. Economic Indicators Update GMT Ccy Events Actual Consensus Previous Revised 9:00 EUR Germany Ifo business climate Nov 85.8 88.7 90.2 9:00 EUR Eurozone Current account (euro) Sep -6.0B N/A -7.9B -6.0B 10:00 EUR Eurozone Industrial orders M/M Sep -3.90% -3.00% -1.20% -1.50% 10:00 EUR Eurozone Industrial orders Y/Y Sep -1.10% -1.90% -6.60% -6.40% 15:00 USD U.S. Existing home sales Oct 5.05M 5.18M 15:00 USD U.S. Existing home sales M/M Oct -3.50% 5.50% Japan Market holiday