FX Daily Wrap Up

Traders looking at fundamental data were focused on everything from the mid-term elections in the US to strong earnings in Europe. Fixed income markets had mixed reactions to Euro-zone data, but focused more on retail sales, which plunged 0.6% in the month of September, bringing the annual rate down to 1.4%. The contraction in sales was more than the expected slip of 0.4%, and was led by a decline in non-food products, such as clothing and shoes. While the majority in Europe are not spending excess money, next month’s retail spending data could see an improvement, as retail PMI showed a surge in annualized sales during October. Price action in the EUR/USD pair was technically “correct” for both Euro-zone retail PMI and retail sales, the 10-point changes upon the releases were merely a blip on the charts, as the central focus today was on the US Dollar. Today is just another example of political events trumping fundamentals, as mid-term elections are in process in the US, and major speculation is being played out as to whether the Democrats will take back Congress. On a technical note, this looks to be the short-term retraction killer that the Euro Bulls were waiting to end. The EUR / USD pair hit a new multiple month high at 1.2820, before closing out the American session near the 1.2780 level.