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Friday, October 13, 2006

EUR/USD: Waiting for Cues from US Retail Sales

EUR/USD opens right where the US left it last night in the low 1.2550s after some divergent commentary from various Fed members overnight. Dealers are looking for the US retail sales data to break the tie between the hawkish Moskow and dovish Poole comments. Poole highlighted downside risks to growth and productivity while Moskow said more rate hikes may be necessary. Retail sales are seen firm, but the big drop in gasoline prices may keep growth in the headline figure muted. Look for the ex-gasoline figure to get a sense of what the consumer is up to.

EUR/USD is trying to forge a bottom on the medium-term charts and many will eye a sustained move above 1.2575 as a sign a near-term bottom is in. 1.2615 is the next stumbling block if 1.2575 is overcome on a sustained basis. 1.2500 barriers continue to frustrate the downside near-term.

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