Forex trading activity remains scarce on Monday. It seems that the market is taking a pause after a strong movement on Friday...
Forex trading activity remains scarce on Monday. It seems that the market is taking a pause after a strong movement on Friday. In other words, traders are awaiting new (fresh) orienteers, news and drivers to continue playing on the downside in EUR/USD. Meanwhile we see a correctional appreciation of the British pound and a flat correction of the euro. Apparently, some strong movements awaits us on Wednesday and Thursday.
As for everything else, the US dollar is trading unchanged against the major currencies; the risk appetite situation remains stable (FTSE +0.06%, CAC +0.54%, DAX +0.35%). On Monday agenda at 16:00 cet financial we also have Eurozone consumer confidence index publication (previous -9.4, December forecast 9).
In general the Eurozone news background is sluggish. Only some insignificant macroeconomic data could be pointed out:
- According to Destatis, German November PPI rose by 0.2% m/m and 4.4% y/y. A yearly rise was little higher than was expected (forecast 4.3%).
- Seasonally adjusted current account came out at -2.3 bln euro (previous -9.2 bln euro)
Theoretically, the technical picture in EUR/USD as well as stability on the Eurozone bond market may provide support to the single European currency on Monday.
During the whole trading session the EUR/USD pair was trading in the range of 1.3180-1.3125.
On Monday morning, the British pounds appreciated on the back of announcements by the Confederation of British Industry saying they expect BoE to start raising rates within the following six months to curb inflation. The GBP/USD pair rose to 1.5570 from 1.5475.
- Gross mortgage lending came out at +11.1 bln pounds in November against a figure of +12.4 bln pounds in October.
- November net mortgage lending released at +1.3 bln pounds (October actual +1.1 bln pounds).
As before, we still believe that pound’s further direction will depend on BOE meeting minutes and revised 3Q10 GDP data publication. Meanwhile, the current dynamics in GBP/USD is explained by the simple technical correction towards a strong recent decline.