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October 9th, 2014, 9:23 am | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

The euro suffered a near two-year trough early last week which came under fire as further slowdown in the Eurozone inflation deepen pressure for additional stimulus from the ECB.
The common currency fell as low as $1.2571 per Euro before even managing a bounce to $1.2629 which ended in a dreary month which it skidded 3.82 %, its biggest decline in well over two years.

Data on last week’s annual inflation cooled as compared to 0.3 % last September from 0.4 % well below the ECB’s target of fewer than 2 %.

Persistently, the weaker price growth highlighted the difficulty of hitting the predicted target while the euro zone economy persists to stagnate.

The EUR/USD breached lower by a large figure, falling toward 1.2570 before positioning its support and moderately rebounding to 1.2630 last week according to a senior economist at National Australia Bank.

Eurozone equities closed at 1.2 % most probably assisted by the possibility of continued simulative policy from the ECB. The Euro shortly dipped below 138.00 yen EURJPY=R for the first time in more than three weeks but still managed to maintain its 138.45 level respectively.

Renewed pressure on the common currency assisted pushing the dollar index. DXY to a four-year high of 86.218. The index since then edged back down 85.928. As against the yen, the greenback was traded at 109.64 JPY, scaling a six-year high of 109.86.
The dollar motioned off a decline in U.S. consumer confidence last month along with a home price report that fell short of its expectations.

Many are still optimistic that the U.S. economy is on a recuperative path that will let the Federal Reserve hike its interest rates well before the Bank of Japan and the ECB.

Truly, the dollar index hiked almost 8 % in the past three month and its quarterly performance in the past six years was truly remarkable.

Trading in Asia is once again going to be restrained because of the National Day and the ongoing political unrest in Hong Kong which results to a negative effect on traders’ confidence in general.

In spite of the holiday, China will be releasing a new survey on its immense manufacturing sector and any disappointments will in no doubt prevent worries regarding the perceived slower Chinese economy.

Last week, China announced its cutbacks in downpayment and mortgage rates for some home buyers for the first time in six years, treading up further efforts to bolster a wavering economy.

Finally, Australia’s retail sales were closely monitored by the Australian bears, who have by far failed to push the Australian dollar through its 2014 low of $0.8660 AUD=D4. ECONAU. Furthermore, the AUD was last seen at $0.8747, dropping 6.3 % last month.

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