Steady start in FX markets as EUR continues to look heavy

United States Dollar:

UK manufacturing production and trade balance data printed better than market expectations on Friday morning and the pound looked as though it would hold above 1.69 as a result. It didn’t – the USD strengthened through the mid-morning and afternoon session. Meanwhile Eastern rebels in Ukraine have claimed a victory in a “self-rule” referendum – this is hardly helping to calm tensions in the region and markets will be keeping a close eye on developments there. GBP/USD fell to a low of 1.6835 on Friday night but has recovered a little to open this morning at 1.6875. It’s a big week for the pound this week. Employment data, the BoE Inflation Report and a speech by Governor Carney are all due on Wednesday. If we’re going to see GBP/USD break 1.70 this could well be the day but it’s a psychologically resistant level and so will perhaps prove difficult to break. US CPI is also due later in the week and Fed Chair Yellen is again due to speak on Friday.

We expect a range today in the GBP/USD rate of 1.6850 to 1.6910

Euro:

EUR/USD is still reeling from Draghi’s press conference on Thursday and as calls intensify for a rate cut by the ECB the single currency continues to look heavy. It fell to a low of 1.3745 vs. the USD on Friday and has failed to make any kind of convincing recovery this morning – EUR/USD opens at 1.3775. The economic calendar is a bit thin today. There’s no data due from Europe and there’s not much out from the States. It might mean we see some consolidation in EUR exchange rates today, especially so following the wild moves and big sell-off on Thursday. GBP/EUR is also higher this morning and opens at 1.2250.

We expect a range today in the GBP/EUR rate of 1.2210 to 1.2285

Aussie and Kiwi Dollars:

It’s been a steady start down-under. AUD/USD has so far traded a narrow 30 point range whilst NZD/USD has traded within 20 points. They open at .9370 and .8615 respectively. There’s been little by way of economic data from either country - Australian NAB Business Confidence printed in line with market expectations. Later in the week we are due both the Australian and NZ Annual Budget’s whilst from NZ we are also due the RBNZ Financial Stability Report and Retail Sales.

We expect a range today in the GBP/AUD rate of 1.7960 to 1.8100

We expect a range today in the GBP/NZD rate of 1.9510 to 1.9645

Data Releases for the next 24 hours:

AUD: HPI q/q, Home Loans m/m, Home Loans m/m
EUR: No data
GBP: BRC Retail Sales Monitor y/y
NZD: FPI m/m
USD: Federal Budget Balance