Reduced volatility and limited price action in the currency markets over the past 24 hours after the steep losses we saw earlier in the week. It seems that the shift in momentum has run its course for the time being and yesterday the major instruments we monitor in our reports remain pretty much unchanged.
However this is not to suggest that we’re done for the week as today we could expect an uptick in volatility and fresh price action again as the calendar offers a few opportunities for traders to take advantage of the scheduled reports. The Manufacturing and Services PMI reports from the Euro-zone and the Retail Sales report from the UK could and should attract investors’ attention.
With the two major European currencies treading water over the past 24 hours this might be an opportunity to pick up some pace again on the back of the upcoming figures. The Euro could stand to benefit from any sign of improvement in the PMI levels while a retreat in the reported figures could weigh down on the currency’s outlook.
The Euro traded either side of the 1.1100 level yesterday after having dropped more than 300 pips since the beginning of the week. Any signs of better than expected results could send the Single currency above the 1.1200 again as traders will look to cash out any recent short-term gains while a renewed bearish bias on the back of a disappointing PMI report could drive the Euro to test the 1.1000 area.
The Cable at the same time looks poised to gain back some of the ground it had lost over the past couple of days if it finds enough support after the release of the Retail Sales report. Expectations are set for an uptick in consumer demand and that would bode well for the UK currency that received some support from yesterday’s BoE minutes. So a spark of bullish attention should allow the Cable to look for the previous 1.5680 highs and possibly higher towards the 1.5750 area.
Economic Calendar
Recommended Content
Editors’ Picks
AUD/USD holds hot Australian CPI-led gains above 0.6500
AUD/USD consolidates hot Australian CPI data-led strong gains above 0.6500 in early Europe on Wednesday. The Australian CPI rose 1% in QoQ in Q1 against the 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY sticks to 34-year high near 154.90 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price struggles to lure buyers amid positive risk tone, reduced Fed rate cut bets
Gold price lacks follow-through buying and is influenced by a combination of diverging forces. Easing geopolitical tensions continue to undermine demand for the safe-haven precious metal. Tuesday’s dismal US PMIs weigh on the USD and lend support ahead of the key US macro data.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.