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22 Dec 2014

EUR/USD breaks lower on QE rumours

United States Dollar: The pound continued its descent vs. the dollar yesterday falling to a low of 1.5575 overnight. It was dragged lower by the sell-off in EUR/USD which broke down through stops under 1.2250. There wasn’t any data released yesterday worth making mention of. That changes today with the release of UK current account data, Final GDP and US Durable Goods and Final GDP. As mentioned yesterday, markets are increasingly thinning out and so this data may have a bigger impact than usual on rates.

We expect a range today in the GBP/USD rate of 1.5545 to 1.5660

Euro: The rumour mill remains in full swing and the euro was weighed by market chatter that the ECB will implement the equivalent of full blown quantitative easing in January. EUR/USD broke down through stops at 1.2250 and 1.2245 and it eventually fell to a low of 1.2215 overnight. It also weakened vs. the pound yesterday and GBP/EUR traded to a high of 1.2799 yesterday evening. It has settled back since and opens this morning at 1.2740.

We expect a range today in the GBP/EUR rate of 1.2700 to 1.2800

Aussie and Kiwi Dollars: The greenback is stronger across the board, including vs. the AUD and NZD. A Chinese leading indicator released overnight showed that 6 month growth continues to be moderate, which didn’t particularly help either currency. NZ data released overnight showed that the country’s trade deficit narrowed again in November. Despite this, NZD/USD dropped to a low of .7716 overnight. It opens in London at .7740.

We expect a range today in the GBP/AUD rate of 1.9120 to 1.9260

We expect a range today in the GBP/NZD rate of 2.0050 to 2.0240

Data Releases

AUD: CB Leading Index m/m

EUR: French Consumer Spending m/m, Italian Retail Sales m/m, Belgian NBB Business Climate

GBP: Current Account, BBA Mortgage Approvals, Final GDP q/q, Index of Services 3m/3m, Revised Business Investment q/q

NZD: No data

USD: Core Durable Goods Orders m/m, Final GDP q/q, Revised UoM Consumer Sentiment, New Home Sales, Core PCE Price Index m/m, Personal Spending m/m, Personal Income m/m, Richmond Manufacturing Index

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