Alpesh Patel
InvestingBetter.com
General market theme
On Friday price action in the global currency markets was relatively quieter than what we saw earlier in the week as there was a limited amount of fresh news and reports to spark traders’ interest. However the week was filled with a number of important events and developments and so is this week as well meaning that we expect more price action as we move further into the last week of the month. Over the following days market participants’ interest will turn to the US Dollar as we move closer to the Fed meeting on interest rates’ policy. We know that the Fed is in no position to raise rates at this time but their tone in the accompanying statement will set the bar for the monetary policy for the rest of the year.
Price action highlights
The Euro was less volatile on Friday after the spike of volatility on Thursday on the back of the ECB meeting, the Single currency took a turn for the downside during the final 24 hours of trading of the past week and declined almost to the 1.1200 basis of support. Overnight the Euro has corrected and this morning the pair is trading around the 1.1250 area ahead of this week’s fresh news and reports. The IFO Survey is scheduled for release today and expectations are set for a bullish reading that could allow the Euro to correct further to the upside with the 1.1300 area as the next target.
The Cable continues to show a complete disregard for fundamentals and risk factors in the UK as it extends its current rally to the upside. The uptrend reached almost to 1.4500 on Friday and this morning the UK currency is trading around the 1.4450 level showing more appetite to continue climbing. There will be plenty of news and reports to spur the Cable this week but with the focus being mainly on the Dollar the pair could get its cue from the US currency’s outlook as the week progresses hence some caution over the current uptrend is advised.
Focus of the day
The German IFO Survey is the most market moving report of the day so the focus might be on the Euro for the day ahead and since the expectations are set for a positive reading we could see some further correction higher. The rest of the calendar doesn’t have much to offer today but the rest of the week is full of important news so a bit of patience will pay off.
Economic Calendar
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