General market theme
At the beginning of the week investors’ attention was on Europe and the reports and developments that came out over the past 24 hours. We discussed yesterday the importance of the flash PMI levels from the Euroarea and how significant it could be to give direction to the euro and indeed we saw quite a reaction from the single currency. At the same time trading interested revolved around the British pound in light of the upcoming referendum and the dilemma faced as opposing camps are making their case in favor or against the Brexit vote.
Price action highlights
Lower than expected flash PMI readings from the Eurozone put the euro under pressure yesterday and sent the currency trading below the key support area of 1.1050. Actually the euro printed an intra-day low of 1.1000 on the back of the bearish reports breaking out of the previous sideways pattern it was trading in. Overnight the euro has corrected to the 1.1050 area again but the bias is bearish and if today’s IFO Survey confirms expectations and prints lower as well we could see fresh losses towards the 1.1000 area once again.
The pound remained under pressure yesterday on the back of the upcoming referendum on the Brexit issue and as London mayor B. Johnson announced that he’s campaigning in favor of the exit vote. We know that the pound hates political instability, especially within the country hence the currency dropped to the 1.4100 level shedding 300 pips since last Friday. This morning several BoE policymakers including Governor Carney will be testifying to lawmakers so their comments might help the pound correct higher but more volatility is expected as we move closer to the voting date.
Focus of the day
The German business confidence IFO report will be in the center of attention this morning and soon after its release traders will shift their attention to the pound and BoE Carney’s comments in light of the Brexit referendum. Finally later in the day the US Consumer Confidence reading is also key and if it prints lower as expected could deflate any bearish momentum in the euro and cable pairs.
Disclaimer: The information provided by InvestingBetter.com should not be relied upon as a substitute for extensive independent research which should be performed before making your investment decisions. InvestingBetter.com are merely providing this information for your general information. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision and should tailor the trade size and leverage of their trading to their personal risk appetite.
InvestingBetter.com and/or its owners will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained on InvestingBetter.com. InvestingBetter.com does not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.