European Open: Squeeze not reversal

Asian equities were weak, generally following NY’s negative close. Only the Nikkei tried to retrace some of the losses.
Draghi did all he could to weaken the Euro yesterday saying:
“….downside risks stemming from global growth and trade are clearly visible.”
“Signs of a sustained turnaround in core inflation have somewhat weakened.”
“From today’s perspective, this suggests that a sustained normalisation of inflation could take longer than we anticipated in March when we first appraised the overall impact of our measures.”
However as we’ve been saying recently, FX these days is much more about positioning and yesterday we did experience a short squeeze despite Fedspeakers holding their ground also. Even Fed Vice Chairman Fischer reiterated his hawkish stance, downplaying the impact that the strong USD will have. Still, the comments did little to support USD. It seems we will need a further suriprize in US data to get USD-bulls back in their seats.
Looking ahead: this morning’s focus is on UK construction data and the market is looking for a bit of a bounceback, retracing some of August’s weakness . Then this afternoon, US retail sales, PPI, and the preliminary University of Michigan consumer confidence figures are the highlights for the USD.
Charts for Today:
Source: Forextell

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