EUR/USD hits one-week highs on PBOC Governor remarks

EUR/USD hit a one-week high after the statement of the Governor of Peoples Bank of China (PBOC), Zhou Xiaochuan, made in Beijing earlier today.

The EUR/USD reached a session high at 1.3571 at 8:25 GMT, gaining 0.39% on a daily basis. Support was likely to be found at November 25th low, 1.3490, while resistance was to be encountered at November 19th high, 1.3578.

Mondays report by the NAR on their index, which gauges pending home sales in the United States, didnt meet analysts expectations and decreased by 0.6% in October, compared to a 4.6% drop in September. The expectations pointed a 2.0% gain. According to NAR, the 16 days of partial government shutdown in the US during the same month have probably influenced decisions of potential buyers. Experts project that home sales may increase during the upcoming months, but probably at a slower pace. A sale is considered as pending, when a contract has been signed, but the payment has not yet been settled. A deal is usually finalized within a period of two months, following the signing of the contract.

The euro gained strength after Peoples Bank of China (PBOC) Governor Zhou Xiaochuan said in Beijing today that the common currency was important for Chinas reserve management.

Meanwhile, Jens Nordvig, a New York based managing director of currency research at Nomura, cited by Bloomberg News, said: “If you look at how much the euro has moved, and the impact that’s going to have on exports, it’s starting to be a real issue, while last year, it was a dilemma about coming up with policies that really stated very clearly the euro is here to stay. It’s an ironic situation.” Nordvig reminded that the European Central Bank (ECB) is the only major central bank that hadnt entertained the idea of quantitative easing (QE), which according to him indicated that the ECB should consider other ways to stem the rise in the euro.

Later today, the markets expect the release of a string of important US indicators, such as the number of building permits and the number of housing starts for September and October. More importantly, markets are awaiting the announcement of the US consumer confidence survey results for November, as the corresponding index probably reached a reading of 72.1, compared to 71.2 in October.

Elsewhere, GBP/USD reached a session high at 1.6189 at 08:15 GMT, gaining 0.20% for the day. The pound appreciated against the US dollar as markets are awaiting at 10:00 GMT, the statement of Mark Carney, the Governor of Bank of England. USD/JPY fell to a daily low at 101.34 at 0:20 GMT, after which consolidation followed at 101.43, losing 0.25% for the day, while EUR/JPY cross gaining 0.04% for the day to trade at 137.50 at 8:10 GMT.