Attention turns to Europe today with the Euro and the Pound in play

General market theme
Dollar’s weakness set the tone for trading yesterday during the first 24 hours of trading for this event-heavy week. The US currency was in the focus with the Personal Consumption and ISM Manufacturing reports but it failed to capitalize on these releases and instead allowed the likes of the Euro and the Pound to gain against it. Of course traders are looking towards the release of the Non-Farm Payrolls report on Friday to get more concrete data so for the time being their attention will shift to the other major currencies.

Price action highlights
The Euro’s and Pound’s rallies were the highlights of the first session of the week with both currencies printing new highs. As discussed above the Dollar was in the backseat and the Euro that came under pressure at the end of last week managed to gain back the ground lost and actually ticked higher to hit the 1.0900 level. Today’s German unemployment report could allow for a further extension of the rally if the figures print in a positive manner.

The Pound also benefited from this early rally and jumped from the 1.4300 level to trade all the way to the 1.4400 area. The Manufacturing PMI printed better than expected and that allowed the Cable to mount this rally helping the UK currency extend its gains from the sub-1.4200 area where it traded at the end of last week. The Construction PMI levels are expected to day but they shouldn’t prove to be a market-moving release.

Focus of the day
As we already commented above the focus today will be in Europe with the release of the German unemployment levels that should illustrate a stable performance for the strongest economy of the Euro area while the same report for the Eurozone as a whole will come an hour later. The UK Construction PMI release around the same time will conclude the events of the day as we are looking at a very light economic calendar for the day ahead.