United States Dollar: The focus again yesterday was on Greece. A source early on quoted officials as saying that new Greek plans were not enough. Greek PM Tsipras is due to meet with Angela Merkel again today but time is ticking and the longer this back-and forth continues, the less it looks as though a deal will be struck. This sentiment fuelled a mild sell-off in EUR/USD yesterday and GBP/USD got dragged with it, falling to a low of 1.5260. It’s all change this morning however. European yields are pushing higher again (German 10 year yields have hit 1.0%), the dollar is being sold and cable is rallying, now knocking on the door of a break of 1.55. The pair opens this morning at 1.5460. Volatility looks set to continue today as the focus remains well and truly on Europe, Greece and the bond market. Closer to home we have UK manufacturing data at 9:30 and later tonight we are due to hear from Chancellor Osborne and BoE Governor Mark Carney as they speak at the Annual Mansion House Dinner . There may well be clues as to when to expect the bank’s next rate hike.
We expect a range today in the GBP/USD rate of 1.5280 to 1.5550
Euro: It’s been another volatile session for the euro. It fell to 1.1215 vs. the dollar yesterday as negative sentiment on Greece took hold, but that story is seemingly being shrugged off this morning as German yields rally. EUR/USD has pushed 80-90 points higher this morning and trades at 1.1370 currently. Despite no news on Greece, investors are seeing an improvement in EU fundamentals or moreover the inflation outlook is improving – this is seeing the likes of the German 10 year bund yield push higher, and the euro go with it. If the meeting today between Tsipras, Merkel and Hollande is a positive one, we’re likely to see further gains in the pair. Meanwhile, the euro is stronger vs. the pound and GBP/EUR is back under 1.36 at 1.3580.
We expect a range today in the GBP/EUR rate of 1.3520 to 1.3675
Aussie and Kiwi Dollars: AUD/USD briefly fell overnight after RBA Governor Stevens said that the AUD needs to fall further. The move wasn’t sustained and AUD/USD is rallying this morning in light of broad dollar weakness. The pair has rallied 100+ points over the last 12 or so hours as the USD is hammered lower. It’s no surprise that NZD/USD is higher too – it trades at .7215 currently. The moves in the kiwi haven’t been as wild as markets await the RBNZ announcement on monetary policy later tonight. It’s almost 50:50 as to whether the central bank will cut or hold interest rates, so either way expect some volatility in the NZD come 10pm tonight.
We expect a range today in the GBP/AUD rate of 1.9745 to 1.9990
We expect a range today in the GBP/NZD rate of 2.1250 to 2.1645
AUD: MI Inflation Expectations, Employment Change, Unemployment Rate
EUR: No data
GBP: Manufacturing Production m/m, Industrial Production m/m, NIESR GDP Estimate, BOE Gov Carney Speaks
NZD: Official Cash Rate, RBNZ Press Conference
USD: Federal Budget Balance
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