United States Dollar:
It was a fairly quiet session for the pound on Friday and it’s been a steady start to this morning’s session, with it being a Japanese public holiday. The euro was sold off on Friday and the decline in EUR/GBP acted as support to GBP/USD, meaning that it didn’t fall below 1.5638. The high on the day was 1.5683 and it opens this morning at 1.5660. GDP data will be the focus for markets this week with UK second estimate GDP due on Wednesday. US Prelim GDP is due on Tuesday, with US durable goods and new home sales out on Wednesday. There isn’t much by way of data due from the UK or US today.
Euro:
EUR/USD fell throughout the day on Friday. ECB President Draghi spoke before the 24th European Banking Congress that morning and reiterated that the central bank stands ready to act fast, stating they “are committed to recalibrate the size, pace and composition of our purchases as necessary to deliver our mandate”. Later in the day, the People’s Bank of China announced that it was cutting interest rates, the first cut in over two years, which helped commodity currencies to rally across the board, including against the euro. It piled more pressure on EUR/USD, which fell to a low of 1.2358 early on this morning. It has recovered a little in the last few hours and opens the London session at 1.2403. German Ifo Business Climate data is due this morning and if positive, like German ZEW last week, might support the gradual retracement we’re seeing at the moment. German and European CPI will be closely scrutinised on Thursday and Friday, especially so following Mario Draghi’s dovish comments on Friday.
Aussie and Kiwi Dollars:
AUD/USD and NZD/USD both gapped higher on Friday following China’s surprise decision to cut interest rates. There were also reports over the weekend that China was ready to cut interest rates even further. AUD/USD jumped from .8620 to .8720 and NZD/USD went from .7854 to .7943 in a blink of an eye. Both currency pairs have settled lower this morning after what have been steady local trading sessions for both currencies and they sit at .8660 and .7890 respectively.
Data releases for the next 24 hours:
AUD: No data
EUR: German Ifo Business Climate, Belgian NBB Business Climate
GBP: No data
NZD: Inflation Expectations q/q
USD: Flash Services PMI
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