Forex Intraday Round-up: EUR Touches Seven-Month High on Back of Positive Data from the Eurozone

on Dec 19, 2012


The euro reached a seven-month high against the dollar today after the release of theIfo institute’s report showing that German business confidence grew for the second straight month. The index recorded an improvement in December to 102.4 while the sub-index Current Assessment slid from 108.1 to 107.1, below analysts’ expectations of 108.0.
At 11.05 GMT the EUR/USD pair was changing at 1.3273/74 or 0.32 percent higher than yesterday. The crossing reached an intraday high of 1.3283 but lost some ground afterFitch threatened to downgrade US’ triple-A credit rating due to the government’s inability to solve the “fiscal cliff” crisis.

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The quotes Ray Attril of NAB who sees persistent strength in the EUR, which is now trading against the dollar above the mid-September high of 1.3172. The pair has received an upward push from a well received Spanish bill auction and from S&P’s upgrade on the Greek debt by six notches to B-.
Slobodan Drvenica, analyst at Windsor Brokers, sees room for fresh extensions with the pair targeting 1.3282. Above that resistance is expected at 1.3300 and 1.3500.

At 11.00 GMT the British pound rose against the dollar to its highest level since September touching 1.6309 before surrendering some of its gains due toprofit taking. At 12.00 GMT the GBP/USD was changing at 1.6298/98 or 0.28 percent higher than yesterday.
Today is the fourth consecutive day the sterling has been gaining against the dollar pushed by Bank of England’s meeting minutes. According to Bloomberg, policy makers voted 8-1 to leave their bond-buying programme on hold as Eurozone-related risks eased while inflation concerns persist. “The market will interpret the 8-1 as being about as hawkish as one can expect,” opined Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank, as quoted by Bloomberg. “They will begin to price in the possibility of a stronger economic performance in the first quarter, and consequently there’ll be demand for the pound and sterling assets.”

!m[GBP Advances against the Dollars after Release of Bank of England Minutes](/uploads/story/1063/thumbs/pic1_inline.png)
UBS Strategists are bullish on the GBP/USD pair with trending/momentum indicators pointing higher and critical resistance forming at 1.6309. Support can be found at 1.6195 and 1.6153. The pair was unaffected by a CBI survey report showing that realized distributive trades in the UK fell from 33 to 19, disappointing investors who expected a reading of 25 in December.

The Brazilian real surged today against the dollar with the USD/BRL trading deep into negative territory. At 12.30 GMT the pair was changing at 2.0769/99 or 0.53 percent lower than yesterday.
The strength in the real came after the Brazilian Central Bank sold dollar credit lines for the third consecutive day in an attempt to counter currency outflows from multinational companies which are shifting their dividend payments and profits abroad. According to the Wall Street Journal, Brazil’s government intends to keep its currency between 2.00 and 2.10 against the dollar, which is seen as a beneficial range for domestic manufacturers and exporters. The Central Bank sold an undisclosed amount of dollars through credit lines with the commitment of repurchasing them on 1 February at the rate of 2.1105 – the maximumprice it would pay to buy back the greenbacks.


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