Draghi Cautioned Market about Recovery; Euro Plunges

Draghi Cautioned Market about Recovery; Euro Plunges

By: Oliver Miller | Where To Trade | On:22-09-2014 08:22
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Draghi Cautioned Market about Recovery; Euro Plunges

Key Highlights

  • Italian turnover index falls by 1 percent in July 2014, compared to the previous month.
  • Italian industrial new orders index decreased by 1.5 percent in July 2014, and industrial sales gained by 1 percent.
  • ECB President Draghi while speaking to the EU Parliament Committee in Brussels mentioned that the Euro area recovery is weakening and losing momentum.
  • US existing home sales decreased by 1.8% in August 2014.
  • AUDUSD crushed and traded below the 0.8900 support level.

US Existing Home Sales

The US Existing Home Sales figures were released by the National Association of Realtors about an hour ago. The market was expecting the US existing home sales to register a change of +1%. However, the outcome was disappointing, as it registered a decrease of 1.8% to a seasonally adjusted annual rate of 5.05 million. This is the first decrease in the past five months, according to the report published.

The US dollar was seen trading a touch lower after the release. However, the downside was limited as the market still favors more gains in the US dollar moving ahead.

Draghi’s Speech

Mario Draghi, ECB president was scheduled to speak to the EU Parliament Committee in Brussels during the NY session. His comments were dovish as usual, as he reiterated that the Euro area unemployment rate is very high, and there is more risk for a downside to the Euro area recovery. This did not go down well with the Euro buyers, as the EURUSD pair fell from the 1.2856 high to 1.2834 low.

Italian Industrial Turnover Index

There was no major release during the London session today. However, there were a few low-risk economic releases lined up in the Euro zone, including the Greece current account data, and Italian industrial orders and sales data. The Greece current account was released by the Bank of Greece. The outcome was a bit positive as the current account balance showed a surplus of €1.7 billion in July 2014, down by €1.1 billion compared to the same month of the previous year (year-on-year). The market was expecting a surplus of around €1.4 billion. The main thing to note from the statement was that the services surplus climbed in July 2014 whereas the income account deficit decreased.

Moreover, the Italian industrial orders and sales data were also released by the National Institute of Statistics. In the seasonally adjusted terms, the Italian turnover index falls by 1 percent in July 2014, compared to the previous month. There was a decrease of 0.9% domestic market and 1.4% in non-domestic market. Moreover, the Italian industrial new orders index fell by 1.5 percent in July 2014, and industrial sales rose by 1 percent.

The EURUSD pair opened this week on the positive note, but struggled to hold ground during the London session. One of the probable reasons behind the decline was the Italian economic release. The EURUSD pair dived towards the 1.2830 level, and it looks like that it might continue trading in the bearish territory for quite some time.

Oliver Miller

Oliver Miller

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