General market theme
Better than expected PMI reports from Europe and the UK were the main theme in the markets yesterday and the major currencies reacted to this development with fresh highs. There are more reports heading our way with the Services sector releasing its own PMI reading today and if the figures surprise higher here as well we could see more gains for the likes of the Euro and the Pound. At the same time the Dollar starts coming to the forefront as well as Friday’s Non-Farm Payrolls could either leave the possibility of a 2016 rate hike on the table or take it out of the question altogether leaving the Dollar in limbo.
Price action highlights
The Euro benefited from the current bullish bias as the Dollar remains passive and extended its gains above the 1.1200 area to reach as high as 1.1230 yesterday while overnight the currency has corrected a bit to settle just above this key level. The Single currency was rallied significantly over the past few days making it to its current levels coming off the 1.0950 area. However looking ahead we need to see how the Euro will react to the Services PMI reports today and of course the NFP reading on Friday.
The Cable pushed higher yesterday and rallied on the back of a better than expected Construction PMI report that allowed the UK currency to rally above the 1.3300 level while having traded around the 1.3200 area for a couple of days. The Pound seems to be benefiting from the Dollar weakness rather than making new highs on its own but today’s Services PMI report could allow it to hold on its gains even though this morning we’re seeing a correction attempt lower.
Focus of the day
The Services PMI report from the Eurozone, the UK and the US along with the Eurozone Retail Sales figures are the events that will attract our attention today. We could see better than expected numbers in the Services PMI readings which would allow recent rallies to hold on their gains but we also need to keep an eye out for the Retail Sales report that could either benefit or hurt the Euro’s chances.
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