EUR still well supported ahead of key month
What happened overnight
– RBA leaves policy unchanged
– Moody’s cuts outlook for ratings on EU issuance
– Swiss GDP weaker than expected
The EUR remains well supported on the crosses after the big short squeeze in the final two weeks of August. EURAUD was sharply higher on Labor Day Monday, helped by a soft China manufacturing PMI over the weekend, while a less dovish than expected RBA statement this morning has only managed to stabilize price action. Meanwhile, EURUSD has managed to regain the 1.26 threshold so far after failing above that level on Monday and Friday. Equity markets were mostly lower in Asia, and most European markets are in negative territory as well. However, the S&P future is flat coming out of the long weekend. Spanish 10-year bond yields fell sharply, down 21bp to 6.59% after squeezing up to 6.8% into month-end.
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Credit Suisse