European markets advance led by financials; Euro, higher, Pound slumps

FXstreet.com (Barcelona) - European markets are going through gains on Tuesday buoyed by advances in the banking sector. In the FX markets, the Dollar has dipped against Euro and Yen, while the Pound plunged on disappointing UK industrial production.

Eurostoxx 50 Index adds 0.9%, while German DAX Index rises 0.7%, and the french CAC Index advances 0.5%. In the UK, the FTSE Index trades 0.7% up in the first hours of trading.

The banking sectors is going though a strong session while Societe Generale announced its plan to raise EUR4.8 billions in a rights offer in order to re-pay state funds.

In the macroeconomic front, UK Industrial production has declined 2.5% month on month and 11.2% year on year in August, against experts expectations of a 0.3% monthly gain and a 10.2 year on year decline. Manufacturing output has dropped 0.9% on the month and 11.3% year on year; the market consensus was a 0.4% monthly advance and a 9.1% year on year decline.

Euro at higher levels, Pound plunges

GBP/USD, which rose to 1.6048 session high, has plunged about 100 pips after worse than expected Industrial production figures, returning well below 1.6000, and giving away all the ground taken during the day. At the moment of writing, the Pound trades at 1.5950.

EUR/USD has extended its rebound from 1.4480 low on Friday to 1.4750 high on Tuesday's early European session, and the Euro remains moving between 1.4700 and 1.4750.

USD/JPY decline from 90.00 high on Monday has found support at 88.85, and the pair has remained moving sideway's between the mentioned level and Monday's low at 89.40 on the upside.

Forex: EUR/USD: Extension to the psychological 1.5000 cannot be ruled out - Mizuho

Tue, Oct 6 2009, 09:52 GMT
http://www.fxstreet.com

FXstreet.com (Barcelona) - The Euro has shrugged off last weeks' weakness and, after bottoming at 1.4480 on Friday, the pair has rallied almost 300 pips to reach 1.4750 on Monday, and according to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, it could reach 1.5000 area during the current month.

On its monthly outlook, Elliott expect a brief period of consolidation before rallying higher: "Last month the Euro squeezed higher, as expected, and is now due a short period of consolidation in the 1.4600/1.4800 area, though an extension to the psychological 1.5000 level cannot be ruled out."

On the downside, Elliott considers declines should be limited to 1.4443 area: "Declines are seen as medium and long term buying opportunities for an even weaker US dollar later this year. Dips might be limited to the nine-week moving average at 1.4443 which also happens to be the first Fibonacci support."