Simmering European concerns keeps euro weaker against the majors

Simmering European concerns keeps euro weaker against the majors

by Kymberly Martin

NZD

Despite some choppy trading over the past 24-hours the NZD/USD sits almost exactly where it did yesterday morning, at 0.7500.

The currency showed little reaction to the release of the NZ Government’s ‘zero Budget’. 

Markets were rather directionless overnight, though risk appetite remained muted and the EUR remained out of favour. 

Early this morning the NZD/USD attempted a stealthy ascent above 0.7560 before being knocked back to 0.7500. Key support is eyed at 0.7460, the lows that held earlier in the week, and in mid-December last year.

The NZD managed to creep a little higher relative to the ailing EUR, currently trading around 0.5990. Relative to the AUD and the GBP the NZD performed more of a sideways shuffle over the past 24-hours.

The NZD/GBP had a slight surge last evening after the release of UK Q1 GDP data showed the economy contracted 0.3%q/q  (-0.2% expected). However this cross later gave back all of its gains to trade back just above 0.4790 at present.

Still, the NZD/GBP appears to be building support above the critical 0.4750 level which marked the lows last December.

There are no NZ data releases today, and little else in the way of key global data. The market will remain focused on European headlines.

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Majors

Currencies were a little more range-bound, though the central theme of USD strength versus its key European peers remains intact.

The European leader’s summit was concluded without any real outcomes, except an urging to Greek voters to elect a pro-austerity Government on June 17.

Our risk appetite index (scale 0-100%) slipped a little further to 42%.

However, global commodity prices managed to stabilise on aggregate and European equities posted modest gains. (Euro Stoxx 50 +1%). The S&P500 however is struggling, currently down 0.50%.

Simmering European concerns were however reflected in continued EUR weakness.

Sentiment toward the common currency was also not helped by the release of an array of soggy PMI data.

The Eurozone composite index fell further into contraction, from 46.7 to 45.9 (46.6 expected).

The all important German manufacturing component was similarly disappointing, dropping from 46.2 to 45.0. The German services component was more robust at 52.2. The German IFO data for May also came in below expectations (business climate component 106.9 vs. 109.4 expected).

The EUR/USD slumped from around 1.2600 last night to around 1.2530 currently.

Conversely, the USD index rose from around 82.00 to currently trade above 82.30. This was despite the US’s own data releases being far from compelling.

Trading in the AUD/USD was fairly choppy overnight. It briefly touched above 0.9800 before falling back to trade around 0.9720 currently. Key support is eyed at 0.9690.

It is a relatively quiet day on the global data front today.

Tonight, the final reading of the US University of Michigan consumer confidence indicator will be released. However, no doubt there will be plenty of further European headlines to keep the markets occupied.

All its research is available here.

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