Black Wednesday For The Euro

Yesterday it was as if the Black Friday sales had reached the currency markets early as we saw mass selling of the single currency euro.

With little data to go on in the morning session traders seemed to be trading along a more technical line as key levels were reached on Tuesday and subsequently the euro bounced off these resistant points and went into free fall. With the USD in the driving seat over expectations of an interest rate rise the EUR/USD rates tumbled dramatically all day ahead of the US thanksgiving holiday reaching some fresh lows, with some expectation we could see it drop further. Sterling dropped against the dollar also for most of the morning after the UK posted some lower than expected mortgage approvals data, adding to the gain the greenback made on Tuesday as investors further backed the dollar.

At lunchtime we had George Osborne giving his Autumn Statement which was seemingly received well by traders and investors alike. The FTSE share index gained some 5 percent and sterling turned a corner against its major pairings also. The pound had gained a cent already against the weak euro but managed to push on over the rest of trade to gain another half cent before contracting slightly towards the end.

With the release of US durable goods orders data at 1.30pm which came out better than expected one might of expected the dollar to rally again but new home sales and jobs data came out lower than forecast and overshadowed leaving the pound free to make some further gains, claiming around ¾ of a cent over the whole day.

As the US markets stay closed today to celebrate with friends and family for the rest of us it’s going to be a fairly quiet day elsewhere too. We only have Swiss industrial production figures released first thing this morning and EU money supply which is a low key release anyway. 

It could be a day where the USD corrects previous gains as the market is shut or with the sentiment against the euro and fundamentally against the pound with the continued talk of long delays in any UK interest rate rise, another day where the USD prevails. Either way, those with any currency purchase to make in the coming days or weeks might be prudent to keep comms open with their broker here at CI just in case some attractive spikes occur or the markets get back to supporting the dollar.