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Risk FX Off Lows As Equities, Chinese PMI Boost

Last updated 2/1/2012 3:30 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Currencies rebounded off the Asian session lows  at the start of the European trade lifted by positive opening in equities but remained lower on the day as profit taking and concerns over the deal in Greece continued to weigh on risk. Risk FX was lower despite better than expected data from Chinese  Manufacturing PMI which printed at 50.5 versus 49.8 as it remained in expansionary territory for the second month in a row.

The news from China suggests that the much feared “hard landing” in the country’s economy has yet to materialize, easing some concerns regrading global growth. Nevertheless manufacturing activity has clearly slowed unable to break above 51 level for the past six months.

PMI data will dominate European trade as well with final European numbers and UK PMI data on the docket. Traders expect mild improvements from the month prior which could help to risk FX to recover further, but enthusiasm may be dampened as markets remain concerned about the lack of definitive deal on Greece. The latest roadblock appears to be a call for a cut to minimum wages which faces  vicious opposition in the Greek Parliament  and Prime Minister Venizelos is expected to call an emergency meeting with party leaders to force an agreement.

The EUR/USD broke through the 1.3050 level in Asia but has since recovered its footing. Nevertheless it remains vulnerable to further selloffs and a possible test of 1.3000 if risk flows turn negative as the day proceeds.       

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.