A quiet start for the currency markets yesterday in a week that is expected to be extra busy with important reports and developments from both sides of the Atlantic. However yesterday’s price action was rather smooth and we didn’t see the excess volatility we expect for the rest of the week.
The most active instrument from the ones that we monitor daily was the Pound against the US Dollar that illustrated some instability after the release of the UK Manufacturing PMI. Further price action is expected down the road for the Cable as the week is filled with important events: the release of the Construction and Services PMIs but more importantly the BoE meeting on monetary policy and the unusual press conference to follow it.
The Cable spent the day trading either side of the 1.5600 level but we believe that the bias at this time is bullish and even though yesterday the price action was mostly negative we expect further gains for the UK currency this week. The PMI reports are expected to print stable if not better than last month and the BoE policymakers are warming up to the idea of raising rates in early 2016. If Governor Carney shares this bullish bias with the rest of the world on his press conference on Thursday then we should see a strong performance for the currency this week.
At the other end of the spectrum, the Euro was relatively quiet over the past 24 hours trading slightly lower against the US Dollar. The Euro ended last week with a spike higher that caught some investors off guard and thus trading yesterday was rather careful and reserved. The Single currency didn’t seem to care about reports coming in from Greece that its stock market on its opening day after a few weeks of being closed dropped a staggering 23% on its opening minutes.
The Euro seems fragile at this time as we mentioned in our previous reports, the bearish outlook of the Single currency is due to the headwinds that the Greek government will face trying to come to an agreement with its creditors that will require more reforms and more measures. At the same time we expect a solid performance for the Dollar hence the combined forces are most likely bound to drive the Euro lower. Next support lies around the 1.0900 lows of last week.
Economic Calendar
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.