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EUR/USD Trades above 1.36 amid Mixed US Data

H.S. Borji
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EUR/USD Trades above 1.36 amid Mixed US Data

The euro advanced against its US counterpart Wednesday, exceeding the 1.36 handle amid signs German consumer confidence was improving, while US data gave mixed signals.

The EURUSD climbed 0.26 percent to 1.3638, easing off an intraday high of 1.3651. The pair has advanced a quarter percent since June 20. The trend line shows initial support at 1.3583. Resistance is below the 100-day moving at 1.3629.

In Eurozone data, German consumer confidence increased sharply for July, GfK reported today. The headline indicator climbed to 8.9 from 8.6, exceeding estimates.

Economic expectations rose to a three-year high and willingness to spend also increased. Income expectations were little changed.

The GfK report comes one day after the Ifo said business confidence declined in June, as ongoing tensions in the Ukraine and greater volatility in Iraq weighed on sentiment. The Ifo’s business climate index, which gauges current conditions and business expectations in Germany, dropped to 109.7 from 110.4.

Elsewhere in the Eurozone Italy said retail sales rose sharply in April. Retail revenues rose 0.4 percent in April, following a 0.2 percent drop the previous month, Istat reported today. Compared to April 2013, retail revenues were up 2.6 percent, following a contraction of 3.5 percent the prior month.

In US data, durable goods orders unexpectedly declined in May, as demand for military equipment fell sharply. Orders for manufactured goods meant to last three years or more fell 1 percent in May, official data showed.

In a revised estimate of first quarter GDP, the Commerce Department also said the US economy contracted 2.9 percent annually in the first quarter, as personal consumption expenditures were smaller than initially forecast.

A separate industry report released today showed the US services sector in June expanded at the fastest pace in nearly five years, as output and new business increased sharply. Markit Group’s services purchasing managers’ index increased from 58.1 to 61.2, toppling forecasts.

The EURGBP headlined the G7 crosses, advancing 0.18 percent to 80.25. The trend index is slightly bearish, with initial support located at 0.7987. Initial resistance is found at 0.8031.

In UK data, the Confederation of British Industry’s distributive trades survey disappointed the markets. The June reading of 4 was 12 points below the previous month’s level and 20 points below forecasts.

The EURJPY advanced 0.05 percent to 138.79. The pair faces initial support at 138.48 and resistance at 138.98.

The Japanese government will report on national consumer prices, unemployment and retail trade later in the week.

Investors will use the consumer inflation data to gauge the Bank of Japan’s stimulus program and whether more effort will be needed to bring inflation back toward the 2 percent level.

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