European Market Update

European Market Update

European data again disappoints led by German IFO Business Climate that hits a 2 ½ year low; German 10-year auction avoids another 'technically uncovered' result

The European session began on a somewhat optimistic note following the rise in China's manufacturing PMI but the European data failed to cooperate and heightened risk aversion sentiment. The major European advanced PMI readings were basically below expectations while the German IFO Survey unexpectedly declined for the 6th straight month with the Business Climate hitting a two-and-a-half-year low. The EUR/USD slumped from the upper 1.2980 area to test 1.2925 ahead of the NY morning. Dealers noted that a break of 1.2900 level could open up a potential run on the 200-day moving average at 1.2828 area. FX action settled down as European equities managed to hold onto slight gains despite the weaker data