Data/Event Risks
- USD: A big week for data, especially on Wednesday with ADP employment, Q4 GDP and the FOMC at 19:15. Thursday is also hectic, with claims, PCE and regional PMIs, followed by payrolls and ISM on Friday. Dollar stands to benefit should the macro news confirm that the recovery remains on track.
- EUR: Little of interest today. Indeed, calendar looks sparse until inflation and unemployment data which comes out on Thursday.
- GBP: Not much to excite today. Money supply and mortgage approvals tomorrow, and then Nationwide house prices on Thursday. Â Elliott Wave Analysis: GBPUSD Could Retrace To 1.5800-1.5900 Within Larger Downtrend
Idea of the Day
Safe haven currencies such as the yen, the Swissie and the Aussie have been under pressure recently, while both the dollar and the euro have been in favour. In the near term, we might just see the dollar benefit a little more from this allocation away from the safe-havens, if only because the US economy appears in better shape than that of Europe.
Latest FX News
- USD: Made healthy strides on the first day of the new trading week. With the economies of Europe/UK/Japan still grappling to avoid recession, traders were minded to adopt long dollar positions ahead of this week’s barrage of macro data which is likely to confirm that the US recovery in still on track. Month-end flows also helping.
- JPY: Witnessed some yen short-covering against all of the majors yesterday, especially away from the strengthening dollar. AUD/JPY dropped a big figure at one stage from the early high, while GBP/JPY lost more than 1%. Some further short-covering overnight saw USD/JPY fall to 90.40 before it rebounded back through 91.0, now 90.70.
- EUR: On a day when the dollar was in demand, the single currency held pretty firm, yet another sign that the underlying bid is robust. Single currency unmoved by remarkable comments from French Labour Minister Spain, who declared France to be ‘totally bankrupt’.
- GBP: Continues to trade like a sack of potatoes, with cable declining still further to 1.57 and EUR/GBP relentlessly marching up to 0.8575. The poor state of the economy (the labour market notwithstanding) and PM Cameron’s commitment to a referendum on Europe are both weighing on sterling.
- AUD: As safe-haven demand has diminished recently, so has the appetite for the once impregnable Aussie. Yesterday it slipped back below 1.04, the middle of the 1.02-1.06 range which has existed for the past six months. Bounced overnight in response to decent business confidence figures.
Further reading:Â Europe unlikely to join the currency wars
