Thursday June 3, 2010 - 18:20:09 GMT
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Euro Weakness Suppresses Risk Appetite
Thin trading conditions ahead of the U.S. Non-Farm Payrolls
Report on Friday and less than stellar economic news from the Euro Zone is
helping to weaken the Euro at the mid-session.
While risk appetite appeared to be returning to the markets
on Wednesday because of better than expected U.S. housing data, this idea was
dampened on Thursday after the Euro Zone reported an unexpected drop in retail
sales in April. There was an upward revision to the May Purchasing Managerâ€™s
Index but that wasnâ€™t enough to level off the market. Analysts now believe that
based on the data, the next recovery is going to be triggered by renewed
investment or net trade rather than by consumer spending.
Technically, the Euro is in a downtrend but trading inside
of a short-term range of 1.2453 to 1.2110. Downside momentum is building which
could drive this market through the low-end of the range, which could trigger a
Early this morning the USD JPY surged to the upside.
Investors were still reacting to the resignation of the prime minister and to
the possibility of a slow down in the economy. Increased risk appetite was also
putting pressure on demand for lower yielding assets. The mid-session
turnaround in the stock market after early morning strength is helping to
weaken the USD JPY.
Technically, the Dollar/Yen is trading higher but well off
its high. The break back under the .618 retracement level at 92.41 indicates
profit-taking. This could be a sign that the market is getting ready to settle
into a range between 91.61 to 92.41.
Weakening crude oil and falling equities is helping to
underpin the USD CAD. The main trend on the daily chart turned down on
Wednesday, but there was very little follow-through to the downside this morning.
At this time the market is trading inside of a retracement zone at 1.0394 to
1.0481 and is likely to stay there until the release of the U.S. employment
numbers on Friday.
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