Alpesh Patel
InvestingBetter.com
General market theme
Price action on Friday was limited in the major money markets we’re monitoring in our daily report and last week ended with volatility registering really low levels. The same cannot be expected for this week though as there is a host of important news, reports and developments coming our way over the next 5 trading days and the major currency instruments are bound to react to this fresh stimulus. The overarching bias in the markets has to do with the Dollar weakness even though the US currency didn’t do that bad at the end of last week however while the Fed remains cautious over their next rate hike the Dollar will remain in the backseat.
Price action highlights
The Euro pushed slightly higher on Friday coming off the bottom end of its sideways trading range at the 1.1350 area to push above the 1.1400 barrier once more. Momentum was lacking from this move though and even though the Euro seems to have managed to build a basis of support around that area the upwards breakout from the sideways formation is another thing. As we mentioned above the Dollar remains vulnerable but for the Euro to really benefit from it fresh stimulus is needed and we’ll have to wait and see whether this week’s reports will be enough to push the Single currency towards the 1.1500 level which should be the next area of focus of the Euro.
Similar to the Euro the Cable edged slightly higher on Friday as well but the move was not met with momentum as early in the morning the release of the Production reports surprised to the downside. Both Industrial and Manufacturing levels printed lower than expected and any momentum to the upside diminished instantly, however the UK currency managed to recover and finally end the day above the 1.4100 area. For the time being the Cable is trading sideways between the 1.4000 and 1.4150 levels waiting for this week’s BoE on Thursday where should bearishness still be the theme then 1.4000 will give way.
Focus of the day
Today’s economic calendar is virtually empty of any reports scheduled for release and traders will look to stay cautious for the first 24 hours of trading looking for fresh stimulus to trade on. The only piece of news worth keeping an eye on is two public speeches from two Fed officials, Dudley and Kaplan, that could provide some insight on how bullish or not the Fed is at this time on raising rates within the next few months.
Economic Calendar
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