Data/Event Risks
- USD: Busy agenda with retail sales and PPI at 13:30, business inventories at 15:00 and FOMC Minutes at 19:00. Retail sales arguably the most critical – US consumer has been quite buoyant recently. If this continues then the dollar should benefit. Obama to hold press conference at 18:30.
- EUR: Little else other than EU industrial production out at 10:00. Greek developments and Spain still the main movers for the single currency near term.
- GBP: Jobs data and Quarterly Inflation Report out later. Both might help the currency, as employment has been strong recently and inflation is sticky, which thwarts additional QE, at least short term.
Idea of the Day
Expect some volatility in the majors today amidst an intensification of event risk. Plenty of data releases in both the US and UK, election uncertainty in Japan, Greek concerns in Europe and then President Obama’s press conference later. Traders need to be especially fleet-footed.
Latest FX News
- EUR: Was lower for a time, not helped by weak ZEW, before Bild article claiming Germany was prepared to write a big cheque to Greece provided the euro with a brief boost. Even so, it is clear that fundamental differences exist between EU and IMF over Greek debt-sustainability.
- JPY: Weaker overnight after PM Noda declared preparedness to call an election. USD/JPY at 79.85 after triggering buy stops on the way up. Expect resistance in the 80.30-80.50 region. EUR/JPY at 101.50 after dipping below 101 overnight; seems to be forming a base.
- GBP: Higher inflation figures boosted the pound for a time, which was already attracting buyers against the euro. EUR/GBP cross fell to 0.7970 at one point before profit-taking ahead of today’s figures. Dollar strength weighed on cable as the day progressed.
- AUD: Resilient once more, despite healthy dollar. Aussie still attracts buyers – some view dollar as vulnerable because of the fiscal cliff, euro as suspect because of Greece and Spain, and the yen as risky because of high government debt and recession. Moody’s reaffirmed AAA status.
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