The markets opened quietly at the start of the week with EURUSD held in a two day 100pip range. Traders paused whilst analysing the volatile price action from Draghi's comments last week. The US Non-Farm Payroll also provided a mix picture as although more people found employment during last month (163k against a forecast of 101k) the unemployment rate rose marginally higher (8.3% from 8.2%). However, traders were looking for some type of commitment for the ECB and ESFS bond buying scheme for the Spanish and Italian markets. They were disappointed as it now looks likely that no decision will be made until September 12 when the German constitutional court rules on the ESM. The greenback rallied against most of its counterparts as investors shied away from risk. The JPY experienced whip-saw type price action fuelled by a surge in US interest rates, fears of a Japanese ratings downgrade and political instability as new elections takes place. The AUD lost ground late in the week as the RBA Statement suggested a strong AUD will be a drag on growth as well as the impact of weaker Chinese data.
For next week:
It seems as though European and US central banks are looking to September for any type of significant action, if any is to be taken. However, the BOE MPC Meeting minutes (Wednesday) and CPI (Tuesday) will be closely looked at as the Bank of England Governor Mervyn King heightened the possibility of a rate cut when downgrading UK growth to zero percent for the year. Whilst we can never predict news and most is generally priced in, be careful of intra-day volatility around these news announcements. Always follow technicals first and foremost as that is how we make money right now, rather than something that may or many not happen a few months down the line.
No comments:
Post a Comment