EURUSD Declines On Weak German IP

http://ashraflaidi.com/forex-news/euro-adrift-after-weak-german-ip

German IP disappointed; British trade deficit narrowed; aid for Cyprus likely delayed; daily studies on USDJPY to give sell signals; German auction. Canadian housing starts; crude inventories and 10 year auction are next.

The greenback is stronger against most majors in the ongoing session. European equities are trading little changed.

The common currency came under pressure after German industrial production disappointed as it rose only 0.2% in November while analysts expected a 1.0% growth. October's result was revised up to -2.0% from -2.6%. Another factor behind the pressure on the euro is squaring of long positions ahead of tomorrow's ECB meeting. EURUSD trades below yesterday's low around 1.3050 and EURGBP fell to 0.8133.

In other news, British trade deficit narrowed in November to GBP 9.164 bln from previous deficit GBP 9.5 bln; Greek industrial production fell 2.9% y/y and Cyprus is likely to have to wait till early March before the financial aid is approved, German newspaper Handelsblatt reports inside sources.

USDJPY is consolidating yesterday's gains and trades around 87.50. Unless we see a push higher, daily studies on JPY pairs are likely to give sell signals shortly. Support is seen at 86.50, 85.60 and key support at 84.00. The next BOJ meeting is on 01/21.

Germany sold 5 year bonds totaling EUR 4.086 bln vs. EUR 5.0 bln target. The average yield rose to 0.53% from 0.41% and cover declined to 1.8 from 1.9.

The US data calendar is light again. It contains Canadian housing starts at 8:15 am ET that are expected to rise marginally in December to 198K from previous 196K. Crude oil inventories at 10:00 am are seen growing by 0.9M barrels last week after declining by 11.1M barrels the week before and the last risk event is the 10 year bond auction at 1:00 pm.

Patrik Urban