Risk Sentiment Mixed due to Italian Gridlock, Disappointing US Data but Stronger Earnings - 19.4.2013

The major currency pairs were in general in slight retracement mood, the EURUSD was holding above 1.30 yesterday and mainly trading in 1.3095/1.3000 sideways zone. Recent news for the common currency were not supportive, initially after ECB governing council member Jens Weidmann said that interest rates might be lowered should the data necessitate. Then by Italian failure of the parliament in two rounds of voting to elect a new President who will succeed Giorgo Napolitano, deepening further the political gridlock.

On the other hand the US dollar index also retraced lower from 82.65 to 82.32 as the Philly Fed Manufacturing Index dropped to 1.3 in April, largely disappointing market participants and down from 2.0 reported the previous month. In addition the US Jobless Claims increased slightly the previous week to 352K compared to two weeks ago at 348K. Risk appetite reduced as the US equities declined with the S&P 500 losing 0.67% and the Dow Jones Industrial Average closing lower by 0.56%. Though after closing, overall strong earnings reported with Google EPS at $11.58 beating estimates of $10.66, Microsoft EPS $0.72 also beating estimates at $0.68 but IBM reported EPS at $3.00 missing estimates at $3.05.

Elsewhere the sterling against the greenback recovered from recent low at 1.5217, advancing to 1.5323, the USDJPY is steadily gaining ground in the last 3 trading sessions, rising as high as 98.80. Investors focus today will remain on G20 meetings, on Euro-zone Current Account and on Canadian CPI.