Steady ranges ensue as caution prevails in FX markets

United States Dollar:

It was a very quiet start to the week in FX markets. GBP/USD drifted lower during the morning session but found good buying support at and around 1.7050. Risk was off for most of the morning as investors took a cautious approach to trading post the Malaysian plane attack and the ongoing violence in Gaza. Meanwhile, a report released by the EY Item Club yesterday stated that the UK economy would grow faster than any other country in the G7 during 2014 but that low wages, low inflation and a strong pound would mean that interest rates wouldn’t rise until next year. GBP/USD has continued to trade a steady range overnight and it opens this morning at 1.7070. There’s a smattering of UK economic data today including public sector net borrowing data and CBI industrial order expectations but the main focus for traders in GBP/USD will be on CPI and Existing Home Sales from the States this afternoon. `

We expect a range today in the GBP/USD rate of 1.7010 to 1.7125

Euro:

EUR/USD dropped from 1.3540 to 1.3515 in the early European session yesterday, partly prompted by the weaker than expected German producer price data which printed at 0% vs. exp. 0.1% m/m. It then continued to trade close to the 1.3520 level throughout New York and Asia but is being dumped again this morning in early Europe. This comes despite the news yesterday that the IMF had raised its German economic growth forecast to 1.9% from 1.7%. The theme at the moment is risk off and it’s hurting the single currency. EUR/USD opens this morning at 1.3505 whilst GBP/EUR is continuing to push higher, this pair trading at 1.2640 currently.

We expect a range today in the GBP/EUR rate of 1.2600 to 1.2675

Aussie and Kiwi Dollars:

AUD/USD slipped to a low of .9358 overnight as markets awaited a speech by RBA Governor Stevens, half expecting him to talk the Aussie dollar down. He actually didn’t and didn’t say anything too dovish with regards to monetary policy either and AUD/USD recovered. It opens this morning at .9390. The next focus for local markets will be on Australian CPI, released later tonight. NZD/USD has been steady but if anything has lost a bit of ground - it has fallen from .8712 to .8665 during the last 24 hours.

We expect a range today in the GBP/AUD rate of 1.8100 to 1.8260

We expect a range today in the GBP/NZD rate of 1.9600 to 1.9770

Data Releases for the next 24 hours:

AUD: CPI q/q

EUR: No data

GBP: Public Sector Net Borrowing, CBI Industrial Order Expectations

NZD: No data

USD: Core CPI m/m, Existing Home Sales, Richmond Manufacturing Index