General market theme
The choppy price action in the major money markets continued for yet another day, as traders took limited action during the past 24 hours in a very poor environment in terms of fresh news to stimulate interest. The dollar saw some fresh interest against its rivals but nothing that would change the short-term bias, which at this time is pointing sideways.
In the midst of the summer traders’ participation is also at low levels, which makes for poor market conditions and we could see more of the same today as we’re walking towards the end of the week, where we might get a bump of action as the US Retail Sales come into focus.
Price action highlights
The euro has formed a peak formation just below the 1.1200 level, but the lack of any significant price action makes it hard to attract interest from traders. The single currency has lost some of its momentum to the upside as investors are probing demand in the dollar ahead of tomorrow’s Retail Sales report that could spark some trading action during a relatively dull period for trading.
A possible correction lower today would see the euro moving towards the 1.1130 lows, while a break higher would require significant demand which seems lacking at this time.
The cable made an attempt to correct higher yesterday and reached the 1.3100 level on the back of some dollar weakness, but this was short-lived and a reversal followed that took the rate back around the 1.300 area.
Like we discussed above for the euro, the market conditions are not ideal at this time, hence we’re seeing these sudden and often changes in direction and today we expect more of the same, as there is no particular reason for the UK currency to trade towards a set direction for the next 24 hours.
Focus of the day
The barren economic calendar continues to create a dull trading environment this week, and with many investors taking their vacations in the middle of August we should see more of the same today as well.
Apart from the US Initial Jobless Claims report which will be released later in the day there’s really nothing to attract traders’ attention, so we believe that to see any increased activity we will need to wait for tomorrow and the Retail Sales report from the US.
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