Most majors were confined to established ranges during the European session yesterday after the initial gyrations in the wake of the Japanese GDP data. The euro was perhaps the only standout to this, comments from ECB President Draghi later in the day throwing some further crumbs of hope to the market that the ECB could yet start buying government bonds if the deflation threat persists. Concerns regarding the global economy are clearly to the fore in the wake of the G20 meeting, not least because central banks are, to varying degrees, lacking in terms of the firepower to deal with further slippage in their respective economies. As we mentioned yesterday, this makes for a less trended FX environment vs. what was seen in the previous quarter as the anticipated divergences look less likely to pan out in the way that was anticipated a few months ago.
One of those expected divergences that has come back into line has been sterling. The push above 1.70 earlier this year was in part powered by an expected rate increase before the year end, which has failed to materialise. Indeed, it’s now more likely than not that the BoE will be having to explain an undershoot of the inflation target range (1% to 3%). The headline rate is seen holding steady at 1.2% tomorrow, although it’s notable that expectations from banks and other forecasts are more skewed towards the upside. This could give some scope for sterling to reverse some of the recent weakness, but the market does not appear to be willing to push against the tone of the Inflation Report seen last week. After UK inflation data at 09:30 GMT, German ZEW data at 10:00 will be in focus, with US PPI thereafter at 13:30 GMT. Elsewhere, markets getting increasingly more edgy regarding EURCHF as it continues to move lower towards the SNB’s 1.20 floor.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.
Recommended Content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD edges lower to near 1.0750 after hawkish remarks from a Fed official
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar gains ground due to the expectations of the Federal Reserve’s prolonging higher interest rates.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
FTX files consensus-based plan of reorganization, awaits bankruptcy court approval
FTX has filed a consensus-based plan for its reorganization, coming almost two years after the now defunct FTX filed for Chapter 11 Bankruptcy Protection in the District of Delaware.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.