General market theme
The US dollar was in the centre of attention yesterday but for all the wrong reasons again as the US currency came under fresh pressure when the ISM index from the US was released. The figures were expected to print in a steady manner and lend some support to the dollar that has been weak over recent sessions however the Non-Manufacturing index printed lower than expected revealing further problems in the US domestic economy. The European currencies benefited from this development with the euro and the pound printing fresh highs and today we’ll see whether they can hold on their gains. German Industrial Production printed lower earlier this morning and UK figures are coming up so it will be interesting to see how the EU currencies will react.
Price action highlights
The euro rallied to the upside when the ISM figures were released and the rate climbed all the way to the 1.1250 area where it spent the rest of the day treading water. The euro is capitalizing on dollar’s weakness on the back of the NFP report last week and bearish reports in the past couple of days but the 1.1250 area has been the level resistance in any attempts to continue to the upside. The bearish Industrial Production figures from Germany this morning is taking off some of euro’s momentum so it might be hard for the Single currency to overcome this resistance area at this time.
The Cable also made its way higher yesterday as the ISM figures put the dollar under pressure and allowed the UK currency to further extend its advance against the buck. The uptrend edged around the 1.3450 area where it settled for the rest of the day and this morning we’re seeing a correction attempt with the pound challenging the 1.3400 support area. The release of the Manufacturing/Industrial Production figures later today will play its role in offering support to the pound that has been running an impressive rally over the past week or so.
Focus of the day
The British Manufacturing and Industrial Production figures are in focus this morning as Germany’s reports printed earlier in a bearish manner. Apart from these reports later in the day the UK GDP levels and the US Mortgage Applications shouldn’t play too much of a role in today’s price action so we will be focused in these early reports ahead of us this morning.
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