Currency markets were relatively active over the past 24 hours even though we expected a calm and quiet session due to the lack of any important reports or developments in any fronts. The truth is that the trading session yesterday didn’t have any excess volatility but that is not to mean that we didn’t have interesting price action. The US Dollar was on the move and of course this price action took its toll on most of the major currency pairs as the US currency is part of them.
The Dollar was unexpectedly on the decline over yesterday’s session but that had nothing to do with any fresh news from across the Atlantic. On the contrary it was this exact lack of any news or developments that led investors to cash in some of their profit on the Dollar against the Euro and other major currencies. The buck has gained significantly during recent session on the back of the Fed’s intention to raise their key interest rate within the current year and this bullishness has been reflected on the Dollar’s strength against it peers.
The Euro benefited greatly from Dollar’s temporary weakness yesterday and managed to mount a relief rally to the upside. The Single currency breathed a lit bit easier after a lot of bearish sessions that had led it down to the 1.0800 area but yesterday the rally allowed the Euro to hit 1.0960. The sentiment in the Euro hasn’t changed at all, there is hope though that the following days the Greek Parliament will manage to pass the necessary measures to get the rescue pack from the Eurozone.
From a fundamental side of things, the outlook in the Euro remains bearish while the US Dollar’s weakness is considered temporary. The Single currency will face tougher times again when the harder parts of the Greek deal need to be passed through the Parliament while the Dollar is expected to receive renewed support next week with the FOMC rate decision. So for the time being the Euro could extend its recovery slightly to the upside but this would only offer us a better selling price as the bias remains bearish.
Surprisingly enough the Cable was not among the currencies that benefited from Dollar’s weakness as the British currency ended the day slightly lower against the Dollar. In general thought the Cable remained trading sideways for yet another day as the release of yesterday Public Finances’ reports didn’t offer anything substantial.
Today however we will have the change to go over the minutes of the latest BoE meeting on monetary policy and we will find out exactly how serious policymakers are about raising rates early in 2016. Expectations are that the minutes will offer support to the Cable that could drive it higher close to its recent 1.5650 highs.