Forex trends favoured high-beta currencies at the expense of safe havens the US dollar and Yen which took a solid hit against major counterparts. The Euro snapped its losing streak with initial moderate upside gaining momentum as Draghi’s comments hit the wires. This in-turn prompted a short squeeze, with the key inflection point triggering stop entry orders on the way up. The EURUSD pair rose to highs of 1.2330 throughout the session from levels around the 1.2135 mark before Draghi’s speech.
Across the channel, sterling trajectory was slightly sharper after an early week slump with cable making a three big-figure leap over the session to session highs of 1.5725. Solid gains were also noted across the commodity bloc with the Kiwi outpacing the Aussie dollar while the CAD lagged behind. The Aussie dollar made a break through 104-figure to highs of 104.25 before consolidating gains just below the figure and current levels around the 103.9 US cent mark.
In the absence of local news this morning, the Aussie dollar will take direction from regional equities while the release of China’s leading index and Industrial profits for June may also induce some short-term noise. Apart from the constant stream of Euro-centric headlines guiding FX trends, market participants will turn to the U.S GDP release which will no doubt drive stimulus expectations. Recent weeks have seen growth concerns from the U.S lead to a notable shift in stimulus expectations, in turn providing intermittent headwinds for the U.S dollar. Constructing a view on how the U.S dollar will react to critical these evenings GDP has become a veritable minefield, with a mix of global sentiment and QE expectations intermittently shifting greenback demand, and by default its risk counterparts. Gross Domestic Product is expected to record annual growth of 1.4 percent from a previous 1.9 percent, while personal consumption data accompanying the release is expected to slide to 1.4 percent in the second quarter, from previous growth of 2.5 percent.
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