General market theme
Yesterday’s price action revolved pretty much around the US dollar as traders were waiting for the release of the FOMC minutes from the Fed to assess the bias among its members. The minutes revealed 2 things that are equally important: first, that most policymakers join Janet Yellen in her concerned views about the domestic economy and inflation growth but secondly, most of them believe that further tightening during 2016 is needed and should be expected. So even though the dollar ended the day lower on the back of the bearish concerns we need to note it down as a temporary sentiment. Today attention will turn to the euro as the ECB will be releasing their own minutes from their last meeting and Draghi will also be speaking publicly so we might see an attempt to talk down the euro that has been rallying higher.
Price action highlights
The euro edged higher over the past 24 hours but with limited momentum as it failed to print a new high and only managed to go as far as last week’s levels. The bias was positive for the single currency as Fed’s minutes last night took their toll on the dollar but as we mentioned above today’s release of the ECB records from their own meeting and also Draghi’s speech is a risk as it is possible that the ECB President will attempt to harness the rally in the European currency. If the sentiment out of his remarks is bullish then the 1.1500 level should be the next area of focus but if a correction is due then we should be looking towards the 1.1320 lows.
The cable was rather volatile yesterday dropping lower during the morning hours on the back of the bearish bias for the pound but when the Fed minutes were released a correction rally started in light of the policymakers’ concerns about the US economy. As such the drop that took the pound to 1.4000 was reversed and this morning the cable is trading around the 1.4150 area where we left it about 24 hours ago. The interesting thing to see now is whether this correction has legs and if so the next target lies around the 1.4300 highs.
Focus of the day
As we mentioned in our comments above the main focus today is the release of the ECB minutes but also Mario Draghi’s speech a bit later. In terms of any actual reports the release of the Initial Jobless Claims will do little to change the bias in the dollar however Yellen’s appearance in NY along with former Fed Presidents is worth keeping an eye on.
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.