Forex Intraday Round-up: GBP Breaks Above 1.6200, EUR Weakens against USD

on Dec 17, 2012


At 11.10 GMT the EUR/USD was trading in negative territory at 1.3151/56 or 0.11 percent lower than Friday. The pair reached an intraday low of 1.3144 printed at 7.00 GMT but then rebounded after some buying influenced the market ahead of the European opening. The Italian trade balance figures didn’t have much of an impact on the market as investors were waiting for the Eurozone figures and Labour Costs in the third quarter. The Italian global trade surplus widened in October from €0.409 billion to €2.452 billion (£0.332 to £1.99 billion) while the trade balance with EU countries declined from €1.004 billion to €0.981 billion (£0.816 to 0.797 billion).

Later in the day a report showed that the seasonally adjusted trade balance points to a narrow surplus from €11 billion to €7.9 billion (£8.92 to £6.4 billion), while the non-seasonally adjusted surplus widened less than expected from €9.5 billion to €10.2 billion (£7.72 to £8.3 billion). The third quarter Labour Costs in the Eurozone rose from 1.9 percent to 2.0 percent.

Uncertainty in Italy is still reflected in the EUR/USD pairing. Italian Prime Minister Mario Monti’s resignation threatens to slow the progress in fighting against the Eurozone’s debt crisis even though European leaders managed to secure some breathing space as 2012 comes to an end. The Italian upper house is expected to vote on Italy’s budget as early as today, which then will be passed to the lower house. Silvio Berlusconi, the former prime minister who withdrew his support of Mario Monti on 6 December, backtracked and said he will support a “coalition of moderates”.

!m[RUB Weakens for a Third Day Due to Falling Crude Oil Prices](/uploads/story/1041/thumbs/pic1_inline.png)“None of the likely outcomes will derail last year’s reform process,” opined Erik Nielson, chief global economist at UniCredit SpA, in a note to clients referring to the upcoming Italian elections, expected to be held sometime in February. “That said, it requires close monitoring.”

The GBP/USD has once again broken 1.6200 and at 11.30 GMT was trading at 1.6204/07 or 0.24 percent higher than Friday. According to analyst Stoyan Mihaylov the bullish trend will continue with the breaching of the 1.6200 level signalling a climb towards 1.6305. The UBS strategy team are equally bullish and see resistance at 1.6217 and a break above opening the doors for a potential test of 1.6309. Support is expected at 1.6085.
Earlier today the annualized UK Rightmove House Price Index eased from 2.0 percent to 1.4 percent in December. House values fell 3.3 percent on a monthly basis after a 2.6 percent drop in November. The median prediction of 34 economists in a Bloomberg survey shows consumer prices in the UK rose 2.7 percent in November compared to a year earlier, same as the October reading.

On Monday 17 December news agency Bloomberg reported that the ruble weakened for a third day against the dollar as Urals crude, Russia’s main export blend, declined. At 1.50 GMT the USD/RUB pairing was changing at 30.8070/70 or 0.34 percent higher than Friday.
Urals crude dropped 0.6 percent to $107.93 a barrel while Brent crude lost 0.4 percent in London. Oil and natural gas account for about half of budget revenue in Russia, the world’s biggest energy exporter. According to JPMorgan Chase & Co’s EMBI Global Index the extra yield investors require to hold Russia’s dollar bonds instead of US Treasuries fell one basis point to 176.