United States Dollar: GBP/USD traded sub 1.48 for most of the morning session on Monday but as New York came online it pushed higher and up through the big figure, dragged higher by solid bids in EUR/USD. Weaker than expected US data supported the move higher in cable yesterday too with both the Empire State Manufacturing Index and Industrial Production printing below forecasts at 6.9 vs. 8.1 and 0.1% vs. 0.3% respectively. GBP/USD rallied from 1.4771 to a high of 1.4845 and ticked along close to this level throughout Asia. It has snapped lower again this morning though as traders in London like the idea of shorting the pair close to and around 1.4850. Meanwhile, the Fed statement gets ever closer and there’s likely to be a bit of two way movement as the rhetoric, rumours and predictions intensify. There isn’t much by way of economic data from the UK and US today, which in a way will intensify the focus on tomorrow’s announcement.
We expect a range today in the GBP/USD rate of 1.4710 to 1.4860
Euro: The euro was one of the best performing currencies yesterday as EUR/USD rallied from 1.0520 to a high of 1.0615. A combination of weaker than expected US data and a market keen to take some profit on heavily short euro positions ahead of an important economic event on Wednesday contributed to the move. Later in the day, the ECB’s Draghi came on the wires and actually sounded fairly upbeat. He said “the current upturn in economic conditions, which the ECB has helped to generate, must be used (when referring to implementing economic reforms)” and went on to say that “most indicators suggest a sustained recovery is taking hold”. There was no initial reaction to his comments but he hasn’t done the euro’s cause any harm this morning as it opens at 1.0585 vs. the dollar and 1.3965 vs. the pound. German ZEW (economic sentiment) is due for release at 10am today and will be the main even in terms of data from the Eurozone.
We expect a range today in the GBP/EUR rate of 1.3900 to 1.4020
Aussie and Kiwi Dollars: The RBA minutes showed that board members considered cutting interest rates at their last meeting but opted to wait until they had seen more economic data. The door has been left open to a cut within the next couple of months and data between now and the next few months will be closely scrutinised. After slipping to a low of .7610 overnight, AUD/USD has recovered to open this morning at .7660. NZD/USD has been steady over the last 24 hours and trades at .7385 – there’s been no data from NZ overnight.
We expect a range today in the GBP/AUD rate of 1.9250 to 1.9410
We expect a range today in the GBP/NZD rate of 1.9950 to 2.0120
AUD: MI Leading Index m/m
EUR: German ZEW Economic Sentiment, Final CPI y/y
GBP: No data
NZD: GDT Price Index, Current Account
USD: Building Permits, Housing Starts
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