Alpesh Patel
InvestingBetter.com
General market theme
Limited price action for yet another day this week in the major financial markets even though the calendar offered a couple of important fresh data and the days ahead hold a host of significant reports. It seems that the significance of the reports is making investors extra cautious as they have struggled to find their footing since the beginning of the year with the changes in the fundamental and technical bias. As we move forward though volatility is bound to pick up as reports from Europe and the US will be coming in leading up to the Non-Farm Payrolls on Friday.
Price action highlights
The Euro edged lower yesterday breaching briefly below the 1.0850 area even though the unemployment data from Germany wasn’t that bad at all. The bias on the Single currency is bearish and investors are mindful of the upcoming ECB meeting on monetary policy as analysts make word for fresh easing or at least a stern rhetoric towards that direction. As such the Euro will remain vulnerable and the 1.0800 area could be reached within the next few days.
Contrary to the Euro the Cable hiked a bit higher yesterday and tested the 1.4000 resistance level even though the Manufacturing PMI report printed a significant decline. The Pound remained unfazed by this bearish development and one of the reasons analysts cited to explain it is that the positive effect of a cheaper Pound is yet to bet felt by the manufacturing sector in the UK. Nevertheless the bias is to the downside and more losses should be expected if the Cable drops below the 1.3900 support once again.
Focus of the day
Today the economic calendar is relatively light on reports as investors will focus mostly on tier-2 news ahead of tomorrow’s important US employment data. The release of the Construction PMI levels from the UK will not take an important toll on the Pound even if it prints surprisingly lower. The ADP employment data will be closely monitored ahead of the NFPs tomorrow but we believe that traders will remain cautious and wait for the employment data pending for release tomorrow before taking action.
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