EUR rally fails to gather momentum despite strong EU data

With Asia leaving yesterday and the EUR and risk generally on an upward path following the China data, the trend extended after both German and Euro-zone ZEW surveys showed surprising strength. The current situation index for Germany rose to 28.4 from 26.8 with the economic sentiment index posting a more vigorous rebound to -21.6 from -53.8. From the Euro-zone, the economic sentiment index rose to -32.5 from -54.1. However, the rally soon looked tired and ran out of steam just above the 1.28 mark versus the greenback and we reverted back to Asia’s closing levels. Elsewhere, UK CPI data was bang in line with expectations and lower than last month on an annualized basis with fall sled by fuel and clothing.

US data was again better than expected with the empire manufacturing index jumping to 13.48 from a revised 8.19 and above a consensus forecast of 11.0. In the breakdown, now orders index rose to +13.7 from +6.0, employment index rose to +12.1 from +2.3 and shipments up to +21.7 from +20.1. Wall St was encouraged by the better data from both sides of the Atlantic and posted modest gains though the S&P failed to cling on to the 1,300 handle and a late sell-off saw the close at 1,293.

After yesterday’s excitement, the Asian data calendar is less busy with Australia vehicle sales, China property prices and Japanese industrial production/capacity utilization the only data on tap. UK unemployment data will be the highlight for Europe followed by Euro-zone construction output and the Swiss ZEW survey. The US session features US PPI, monthly TIC flows, industrial production/capacity utilization and the NAHB housing market index. The Bank of Canada also releases its monetary policy report following an unchanged verdict on rates yesterday. Today’s speakers include Fed’s Tarullo and ECB’s Weidmann.