The euro dropped under parity against the dollar for the second time in three days today following reasonably positive US data last night and a lack of leads today. Following thebetter than expected US weekly jobless report and Philadelphia Fed business activity, the market took the opportunity to use today's lack of leads to knock the euro back under USD1.00.
The four-week moving average for jobless claims has dropped below the 400,000 level - suggesting a stable labour market - while the sharp jump in the Philly Fed from minus 13 to plus 6.1 raises the prospect of strong Chicago PMI and Institute of Supply Management manufacturing surveys. The drop came despite an upward revision to September German industrial output. The Bundesbank said today that output declined by just 0.6pc in September from August, compared to its preliminary estimate of a 1.2pc drop. Traders at Ulster Bank said that a drop under 99.80c for the euro opens up a drop down to as low as 99.30 before it begins to form a pivotal base. //www.fxcentre.com