1 May 2015
USD finding support after yesterday’s upbeat data, but not against the EUR – BBH
FXStreet (Barcelona) - The asymmetrical market psychology of sell the dollar on bad news but not buy it on constructive data perhaps reflects the performance of the USD against the EUR in spite of a good data print yesterday, which means that a soft data ahead could lead EUR/USD to rise further, as said by the Research Team at Brown Brothers Harriman.
Key Quotes
“Dealers have warned of lower liquidity throughout this week's large moves, but today is worse with the May Day holiday. There are three US economic reports for April that will draw attention today: the manufacturing ISM, which is expected to have improved to 52.0 from 51.5 (even though the advance manufacturing PMI softened); auto sales; and the University of Michigan's consumer confidence.”
“The important element to the confidence report is the inflation survey. The preliminary report short a sharp decline (one-year from 3.0% to 2.5% and the 5-10 year to 2.6% from 2.8%).”
“The idea that the weakness in Q1 US was due to transitory factors, like the Federal Reserve acknowledged, requires a rebound in Q2 for support. Yesterday's news of new cyclical lows in weekly initial jobless claims and the tick up in the Employment Cost Index are steps in the right direction. The bigger than expected jump in the Chicago PMI, also reported yesterday, is promising. The key is next week's employment report.”
“The asymmetrical response by the market, to sell the dollar on disappointing news, but not buy it on more constructive news, is an important reflection of market psychology. However, except against the euro, the dollar is finding support. Thin markets caution against reading too much into the price action now.”
“However, with the euro's move to $1.1285, it met the technical retracement target (~$1.1265). Barring a negative surprise from the US data, this could be it ahead of the weekend.”
Key Quotes
“Dealers have warned of lower liquidity throughout this week's large moves, but today is worse with the May Day holiday. There are three US economic reports for April that will draw attention today: the manufacturing ISM, which is expected to have improved to 52.0 from 51.5 (even though the advance manufacturing PMI softened); auto sales; and the University of Michigan's consumer confidence.”
“The important element to the confidence report is the inflation survey. The preliminary report short a sharp decline (one-year from 3.0% to 2.5% and the 5-10 year to 2.6% from 2.8%).”
“The idea that the weakness in Q1 US was due to transitory factors, like the Federal Reserve acknowledged, requires a rebound in Q2 for support. Yesterday's news of new cyclical lows in weekly initial jobless claims and the tick up in the Employment Cost Index are steps in the right direction. The bigger than expected jump in the Chicago PMI, also reported yesterday, is promising. The key is next week's employment report.”
“The asymmetrical response by the market, to sell the dollar on disappointing news, but not buy it on more constructive news, is an important reflection of market psychology. However, except against the euro, the dollar is finding support. Thin markets caution against reading too much into the price action now.”
“However, with the euro's move to $1.1285, it met the technical retracement target (~$1.1265). Barring a negative surprise from the US data, this could be it ahead of the weekend.”