General market theme
Mixed performances from the majors yesterday in a day where we had fresh news mainly from europe, the release of the ZEW Survey and the UK inflation data were the main drivers behind the moves in the euro and the pound. Between the two, the pound was the more active while the euro kept its trading range and the dollar had nothing to trade on the back of and remained muted.
The less bullish than expected UK inflation data was the surprise of the day and it forced the pound into a U-turn to the downside while the mixed ZEW reading allowed the euro to remain within its current price range without any fresh momentum. Today the release of eurozone’s Industrial Production levels and more importantly the UK employment figures will attract investors’ attention.
Price action highlights
The euro remained within its previous trading range for yet another day as there was little in terms of fresh news to spark some volatility. The ZEW Survey printed in a mixed manner thus not exciting traders and the euro remained between the 1.1200 and 1.1250 area for a second day looking for momentum. Today the release of the Industrial Production levels from the euro area might drive the euro lower but at this time it’s the lack of momentum from dollar’s side that allows the single currency to remain afloat so we shouldn’t expect too much of a reaction for the time being.
The Cable however was rather active yesterday and as investors were expecting a positive inflation data reading the stakes were high. Unfortunately for them though the inflation reading wasn’t as bullish as they expected and the disappointment drove the pound significantly lower as the rate dropped from the 1.3350 area to almost the 1.3150 level as investors looked to close their pro-pound trades on the back of the miss. Today, the release of the UK employment data could put the pound under fresh pressure as analysts expect a pullback from last month’s positive data.
Focus of the day
The eurozone Industrial Production figures is the only piece of euro-related news today and even though we expect a bearish reading we might not see too much of a reaction from the Single currency today. The focus will be on the Pound as the UK employment data are on the docket in the morning and it will be quite interesting to see how the Pound will react to a potentially less bullish reading than last month’s.
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