FX Daily Wrap: Subdued, Sideways Summer
FX Markets have been subdued throughout the session, with focus set to be on Thursday’s ECB meeting. NZD traders will await New Zealand’s CPI data: CPI Y/Y Exp. 1.9% and Q/Q Exp. 0.20%.
Key levels to watch ahead of the aforementioned CPI data: NZD/USD will look to break the 0.737 area to indicate any continued upside. However, with many traders currently short USD, the risk could be to the downside, with NZD/USD bears looking for a break through 0.72. AUD/NZD indicated its upward intention last week, with bulls firmly in control of the market, however, a strong NZD number could see some moment on the downside.
Tomorrow sees a flurry of UK data: CPI and RPI figures, with inflation a concern for the BoE and an upcoming decision, the inflation figures will be under increased scrutiny. Cable trades once again in last month’s trading range, and any strong inflation figures from the UK could see us test 1.3485 (2016 July high). EUR/GBP is also evident of the recent sterling strength, as last week did see Wednesday, Thursday and Friday all print down days. Sterling bulls will look to continue the downward pressure, likely to target the 0.88 – 0.84 Q1 trading range.
The dollar has failed to gain any real recovery today, despite trading off lows and above the 95.00 handle. Volume could pick up later in the week, with the USD likely to be affected by Thursday’s ECB decision. EUR/USD did see buying into the end of last week, however, has slowed around last week’s high (1.1490), confirmation of a tightening ECB on Thursday could really see a push toward 1.50. However, with many short the USD, and long EUR/USD, any disappointment from the ECB, or lack of
mention of tightening intentions, could see a test back down toward 1.132.
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