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EUR/USD Seesaws During Tuesday’s Trading

December 17, 2019 by

EUR/USD demonstrated a seesaw movement during today’s trading session, moving in a range at first, then rallying, then retreating. The main theme for today was the return of a hard Brexit option, which put markets in a risk-off mode. While the euro jumped against the Great Britain pound on the news, the possibility of a no-deal Brexit is negative to the currency in the long run as a no-deal exit of Britain from the European Union would add to economic woes of the block. Meanwhile, the dollar profited from risk aversion but for now, it still trades lower versus the euro.

Both housing starts and building permits rose in November, beating expectations. Housing starts were at a seasonally adjusted annual rate of 1.37 million, up from the revised October estimate of 1.32 million. Building permits were at a seasonally adjusted annual rate of 1.48 million, up from 1.46 million in the previous month. The median forecast was at 1.34 million for housing starts and 1.41 million for building permits. (Event A on the chart.)

Industrial production and capacity utilization increased in November. Industrial production rose by 1.1%, exceeding the consensus forecast of a 0.8% increase, after falling by 0.9% in October. Capacity utilization rose from 76.6% to 77.3%, in line with expectations. (Event B on the chart.)

Yesterday, several reports were released (not shown on the chart):

NY Empire State Index rose to 3.5 in December from 2.9 in the previous month but failed to meet market expectations of a 5.1 figure.

Flash Markit manufacturing PMI was at 52.5 in December, little changed from November’s reading of 52.6. Flash Markit services PMI rose to 52.2 from 51.6. Analysts had predicted figures of 52.6 for manufacturing and 52.0 for services.

Net foreign purchases were at $32.5 billion in October. That is compared with the analysts’ projections of $52.5 billion and the previous month’s value of $49.5 billion.

If you have any comments on the recent EUR/USD action, please reply using the form below.

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