And It's Back To Selling The EUR - Crosses Under Fire Once More
We have seen EUR/USD pushing back above 1.1500 this morning, though what looks to have been a relief move has not lasted very long and we are back on a 1.1400 handle as fears over Italy's debt profile grips the market again. BTPs are getting sold off again in a see-saw of risk sentiment, as Italian stock markets are back on the rack. Yesterday we saw the FTSE MIB recovering to end the day over 1% higher, but this morning we are showing losses to the tune of 0.6% so far and the rest of Europe is following.
Naturally, the EUR suffers on the back of this, and having noted the moves in favour of the USD, we can also see that EUR/CHF is still struggling to hold on to its 1.1400 handle while EUR/GBP has pushed down to new lows on the day to target the 0.8700 with Brexit hopes still riding high.
Consequently, we know that there is only one currency which is the default go-to-currency these days and that is the USD. Even so, we have to be careful at these levels as US Treasury yields have come off better levels, to the yield back-up has softened a little.
Plenty of data risk to contend with this afternoon, with US PPI setting up the market for tomorrow's key CPI print - traders looking for the next prompt on the USD now that rate hikes have been largely priced into the levels they have been. Remember, Dec is close to 80% assured according to futures market, so some may view further upside in the USD as limited.