EUR: Car sales a reminder that the consumer is ok – ING

At the weekend, ECB President Christine Lagarde gave a reasonably upbeat interview to Fox News. She said consumers and businesses were resilient and that whilst growth was not particularly strong, the signs were optimistic, ING’s FX analyst Chris Turner notes.

EUR/USD might find support under 1.1600

"Those comments are a reminder that European unemployment is low and that the consumer savings ratio is relatively high. Welcome news, therefore, comes today in the July EU car sales data. Growth for the EU was 7.4% YoY and 5.8% for the eurozone. The biggest spender on cars is the German consumer, where sales grew 11% YoY."

"Also on the agenda is the release of the ECB minutes from the July meeting. That meeting saw a 5bp jump in short-dated EUR swap rates, but limited fallout on EUR/USD at the time. Since then, short-dated EUR rates have moved another 10bp higher – and probably don't need to move too much more on today's minutes."

"The euro is also facing a little baggage from French politics. However, we think the dollar trend will dominate here and EUR/USD should find support under 1.1600 into September. EUR/CHF is also making life very uncomfortable for the Swiss National Bank, but it will probably manage to find some way to keep it supported below 0.93."