Extremely tight price action through early Europe and with orders reportedly camped at 1.2810 and 1.2840 the range is likely to remain tight for a while yet. French Quarter 3 GDP numbers failed to get the market moving with a slowing to 0.0% from 1.2% in the Q2. As expected the drag came from de-stocking and the external trade balance. Inventories deducted -0.3% from growth while the sharp fall in exports (-0.7%) trimmed -0.2%.
Domestic demand however, remained healthy at 0.5% driven by private consumption and investment although the latter slowed from 1.6% in the quarter before thanks to the contraction in government spending. The breakdown is not as bad as the headline suggests as domestic consumption is holding firm and taking the last two quarters together suggest that growth remains healthy.
Looking ahead, wholesale inventories and Chicago Fed data to provide scope for trade but early action suggests a steady session. Support is at 1.2765 and initial resistance at 1.2850. A close call but on balance just a EUR sell but the lack of interest is clouding near-term direction.
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