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Greenback lower after PMI & Soft New Home Sales

Market Analysis

EURUSD, H1 and Daily

U.S. August Markit manufacturing PMI fell 0.8 points to 52.5 in the preliminary print, unwinding some of the 1.3 point gain to 53.3 in July. It was 52.0 a year ago. However, the services index jumped 2.2 points to 56.9 after rising 0.5 points to 54.7 in July. This is the highest since April 2015. It was 51.0 a year ago. Also, the composite index rose 1.4 points to 56.0 following the 0.7 point increase in July to 54.6. This is the best since May 2015. It was 51.5 last August. All in all this is another solid report on sentiment.

Additionally, U.S. July new home sales plunged 9.4% to 571k after rising 1.9% in June to 0.630k . The prior rebound in May to 0.605k in May was bumped high to 618k, for a net 2-month upward revision of 33k. The months’ supply climbed to 5.8 from May’s 5.2. Regionally, sales were lower in the West, South, and Northeast, but were a bit higher in the Midwest.

The dollar tripped lower after the soft new home sales outcome, pushing USDJPY to 109.07 lows from 109.20, and lifting EURUSD to 1.1814 highs from 1.1798. EURUSD supported today at 1.1740 hourly today and  at 1.1680 for the last days. The data give some push up, as seen in the hourly chart, making a new high for the day.  Therefore a possible closing today above the 1.1835 area, might indicate that sideways Daily movement has finally ended, and therefore the long-seeing Uptrend might continues. On the other-hand, a possible bearish signal in longer timeframes will be sufficient , with a break below the current support level at 1.1680. 

However Eurozone peripherals continue to underperform and the widening of spreads going into Draghi’s Jackson Hole speech is a reflection of market nervousness amid the prospect of reduced support especially for peripheral bond markets. Hence Markets are looking ahead to Jackson Hole speeches from ECB’s Draghi, and Fed chair Yellen, where clues on both Banks policy may be clarified.

 

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Andria Pichidi

Market Analyst

HotForex

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