July 25: European session
EUR/USD dropped from $1.3235 to $1.3180 despite the relatively positive German Ifo business climate and Italian consumer confidence. July German Ifo improved and came almost in line with expectations (106.2 vs.106.1 expected and previous 105.9). It seems that the market was overheated by optimistic expectations following the yesterday’s strong PMIs.
Figures also showed that July Italian consumer confidence increased to 97.3 (forecast: 96.0). EMU’s M3 money supply rose below forecasts during June and private loans contracted further during the same period.
We have witnessed a buy-the-rumor-sell-the-fact reaction in GBP/USD: the pair firstly rose to $1.5378 on the expectation that UK economic growth has accelerated to 0.6% in Q2 from 0.3% in Q1, but then slid to $.1.5314 as the data came in line with forecasts. By the moment of writing sterling has recovered to $1.5330.