Article by ForexTime
The Euro reversed earlier gains following reports that Ukraine President Poroshenko said that Russia has invaded. The Ukrainian president said on his website that he cancels a trip to Turkey due to “Russian invasion” and that he calls an urgent meeting of the country’s security and defense council. In a Cabinet meeting, Ukraine’s Prime Minister Yatsenyuk already called for an immediate U.N. Security Council meeting. The reversal comes despite stronger than expected inflation numbers in the EU reported today.
Eurozone M3 money supply growth unexpectedly accelerated to 1.8% year over year, while June numbers were revised up to 1.6% year over year from 1.5% year over year reported initially. The three months moving average rose to 1.5% from 1.2%, still considerably below the 4.5% reference rate, but the numbers show at least some improvement, even if the counterparts of M3 show lending down 0.2% m/m and 1.6% year over year.
German state CPI data nudged higher in August, with headline numbers rising 0.1 points. Saxony reported a steady headline rate, but numbers suggest that overall German CPI will come in a tad higher than anticipated and rise to 0.9% year over year from 0.8% year over year in the previous month.
Sentiment on the other hand continues to fall. Eurozone ESI economic confidence fell to 100.6 in August, from 102.1 in the previous month. This was a sharper than expected decline, but not a total surprise considering the weakness in other confidence indicators this month. The breakdown showed services confidence falling to 3.1 from 3.6 and the industrial reading falling to -5.3 from -3.8. Consumer confidence was confirmed at -10. The headline reading is the lowest since December last year, and while it remains at relatively high levels and considerably above the long term average of just 94.1, the data will add to concerns about the Eurozone economic outlook.
The Euro reversed after attempting to test resistance near the 10-day moving average at 1.3250. Momentum remains negative as the MACD (moving average convergence divergence) index prints in negative territory with a downward sloping trajectory. The relative strength index (RSI) remains in oversold territory printing a reading of 26, which could foreshadow a correction.
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