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Monday, October 30, 2006

Euro Outlook (30th October 2006)

Data, News, M&A and flows all conspired to leave EUR/USD largely unchanged through the European morning. In the wake of the weak US Q3 GDP data Friday the Dollar has been on offer and EUR/USD is said to be a strong buy on any signals of dips. French data & the Schneider Electric/American Power Conversion deal underpinned while the UAE news & fund USD buying weighed.

Into the North American session and EUR/USD trades 1.2715/35 but it will be the next wave of US data and rhetoric that gives the pair its short-term bias. At 13:30 GMT the Fed's Lacker is set to talk in Baltimore while Personal Income & Spending data for September is also set for release. Economists expect a median rise of 0.3% in income and 0.2% in spending. Following these key event- risks The Fed's Moskow is set to speak at 14:15 GMT in Chicago.

Dealers note speculation of option strikes set for expiry at 1.2750 into the NY cut-off at 15:00 GMT, while stops are seen above the batch of central bank offers going into 1.2765 with the stops above 70. On the downside it is not until sub-1.2700/2690 that the focus will be taken off the topside.

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