General market theme
As the week progresses volatility in the major instruments we monitor in our report is picking up pace and we expect this to continue into today’s session. Over the past 24 hours we’ve noticed interesting price action in the euro, the pound and the rest of the instruments we keep an eye on as investors were reacting to fresh news that came out but more importantly they were preparing for today’s scheduled events and releases. Yesterday the focus was mainly on the UK pound in light of the UK labor market data but today the euro will also come into focus side by side with the pound as the ECB holds their monetary policy meeting while the UK Retail Sales figures are also expected.
Price action highlights
The euro took quite a plunge yesterday ahead of the ECB meeting scheduled for later today as traders believe that Mario Draghi’s main concern will be the level of the single currency that is not helping the growth of the Euro area. Expectations that the ECB head will attempt to talk the currency down drove the euro almost 100 pips lower and if investors are right we should see a further slide in the currency’s rate if Draghi attempts to weaken the euro by mentioning further rate cuts or other easing measures the euro could revisit its 1.1250 lows.
The cable was quite surprising in its price action yesterday as it completely disregarded the bearish round of labor data this month and remained afloat ahead of today’s Retail Sales report. The UK labor market showed more weakness than progress over the past month as the fears of a Brexit are taking their toll in the employment market but the pound remained largely unfazed trading just below the 1.4400 level. Today’s Retail Sales release is expected to print in a bearish manner so it might be time for the pound to run a correction lower and align its price action with the recent fundamental developments.
Focus of the day
Naturally investors’ attention will be divided between the euro and the pound this morning as the release of the UK Retail Sales figures followed by the ECB meeting and Mario Draghi’s press conference will keep them busy. Later in the day the US Jobless Claims will also be released but we don’t expect any major reaction from the dollar to this release so most of the price action should take place during the morning European session.
Economic Calendar
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