Mixed performances from the majors yesterday in a day where we had a number of important events across the board that attracted traders’ attention throughout the day. From the IFO Survey early in the morning to BoE Carney’s testimony and the release of the GDP and Consumer Confidence figures from the US the last 24 hours provided interesting fresh data for market participants to take some action on.
The divergence in the performance of the Euro and the Cable was the interesting highlight of the day as the 2 European currency pairs took different paths yesterday. The release of the German IFO levels in the morning helped the Euro to remain afloat against the Dollar and actually ended the day a bit higher versus the US currency while the Cable extended its losses. It was Governor Carney’s bearish remarks over the low inflation that capped the Pound’s outlook and sent the currency tumbling for yet another day.
Today the focus will remain mostly on the US as yesterday’s report printed mixed, with the GDP levels remaining relatively stable however the Consumer Confidence report came out significantly lower than expected. Today’s Personal Consumption and Expenditure figures along with the Durable Goods Orders report will shed some more light on the state of the domestic economy in the US and a bullish reading should reinforce traders’ confidence in the Dollar and allow the currency to move higher against its peers.
Taking a look at the price action, the Euro is trading around the 1.0675 area this morning having edged higher during yesterday’s trade. The recent uptick has to be attributed to Dollar’s mixed performance yesterday as it will take a lot more than some good IFO numbers to change the Euro’s outlook at this point. Another round of mixed data from the US today could allow the Euro to extend its correction towards the 1.0700 level but all traders should remain short-term focused as the bias remains to the downside with the 1.0600 area being the first target should the Euro reverse lower again.
The Cable on the other hand printed another swing lower yesterday when Governor Carney and his colleagues expressed their concern about the low inflation levels in the UK. The Pound printed an intra-day low of 1.5050 yesterday and even though it corrected to the 1.5100 level overnight the bias remains bearish. Strong US data should reinvigorate the Pound drop with the 1.5000 area being the next target for traders towards the downside.
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