Slightly earlier than usual but wish you all a great weekend!
With mixed economic data released across most western economies, the majority of currencies have ranged against the Greenback. Momentum and volume has been relatively low, which can be typical this time of year, with volumes in the US stock market at 5 year lows. However, UK retail sales surprised the market on Thursday with a rise to 0.3% against an expected of 0%. Traders covered the move in an otherwise lacklustre market with GBPUSD rallying to a 100 pip move. The MPC meeting minutes from the BOE on Wednesday further added some support for the British Pound as several members stated that more QE is still on the table. With a European holiday midweek, and light mixed data from the EU, traders looked at the bond market for clearer direction. Spanish 10 year yields were at a one month low which helped underpin Euro into a 140 pip range for the week. In Asia, the JPY has sold off aggressively against most major currencies as US 10 year Treasury yields increased. Higher rates in the US tend to support a stronger USDJPY as Japanese investors look for higher yields than at home.
Next week's FOMC statement on Tuesday will be watched closely by traders to ascertain the Fed's stance on more QE3. Ben Bernanke set the market up for action in September's meeting, depending on the economic data released during that period. However, with rumours circulating that the ECB will enact its bond buying scheme once Spain requests a bailout, the US Dollar may see some volatility going forward. However, we can never predict news and most is generally priced in. Always follow price action as a leading indicator as that is how we make money right now, rather than something that may or many not happen a few months down the line.
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