Foreign exchange markets continued to tread water last Friday, with traders having to defer to the solid areas of technical resistance which lie just above where many of the main currency pairs are now to be found.
So while the European single currency, to name just one, might have reached new 23-month highs last week, edging higher by 0.07% to the 1.3802 mark, it now faces stiff resistance at 1.3833/58 (61.8% Fibonacci re-tracement of the 2011 move down) and then 1.3958/1.4002, where the 2008/13 resistance line is to be found, technical analysts at Commerzbank pointed out.
That came despite the rather tepid economic readings seen Stateside on Friday. The retreat seen in US consumer confidence - it printed at 73.2, versus 75.2 for the month before (Consensus: 75.0) - could probably be ascribed to the recent goings-on in Capitol Hill. However, the latest durable goods orders data came with no such caveat.
US durable goods orders shot up by 3.7% month-on-month in September, following an 0.2% rise in August (Consensus: 2.3%). However, the figures were greatly flattered by orders for civilian aircraft, which rose by 57.5% on the month.
In a similar vein, at least two well-known economic observers pointed out on Friday the elevated dose of uncertainty which now pervades Wall Street, given the risk for further shenanigans on Capitol Hill come spring time.
FX markets also brushed off third quarter UK GDP figures showing that economic activity expanded at an 0.8% quarter-on-quarter pace, as had been expected. "Looking ahead, falling real pay, the fiscal squeeze and the dormant state of the euro-zone economy seem likely to prevent the UK's economic recovery from gathering much more pace. But with employment growing, confidence returning and productivity still well below its potential, it seems unlikely that the recovery will fade significantly either", Capital Economics said.
In parallel, on Friday evening Barclays Research explained to clients that they now see unemployment in the UK falling to the MPC's 7% threshold in the first half of 2016 and not in the second, as they had previously estimated. Unemployment in Britain is now expected to drop to 7.5% by year-end 2013, versus 7.7% before.
The near-term technical levels to watch for in Cable now come in at 1.6259, the early October high, which together with the 1.6302/69 2012 highs and 2009-13 resistance line will offer tough resistance. To take into account, there are bearish divergences on the daily RSI, Commerzbank also pointed out.
Cable slipped -0.12% to 1.618.
The IFO Institute's German business confidence index for the month of October fell to 107.4 points from 107.7 last month (Consensus: 108.0). The move lower was mainly due to the retreat in the expectations sub-index. That dropped to 103.6 from 104.2 (Consensus: 104.5).
Acting as a backdrop, China's seven-day repurchase rate surged by 154 basis points last week, to 5.03%, the biggest rise since June. On Friday it increased by another 24 basis points.
Dollar/yen edged higher by just 0.03% to 97.397.
Lastly, the ECB's Jorg Asmussen indicated on Friday morning that he is broadly comfortable with the current level of the European single currency in FX markets.