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- Nov, 20 British Pound Fails to Find Support at 20-Day SMA, Euro Maintains Narrow Range
- Nov, 19 Euro Loses Ground Despite OECD Forecast, British Pound Weakens for Third Day
- Nov, 18 British Pound Holds Narrow Range Following BoE Minutes, U.S. Dollar Loses Ground on Risk Appetite
- Nov, 17 British Pound Fails to Hold Ground Despite the Rise in U.K. CPI, Euro Consolidate
- Nov, 16 Euro Poised to Test Yearly High, British Pound Continues to Trend Sideways
- Nov, 13 Euro Halts Three-Day Decline as Economy Emerges From Recession, British Pound Rally Supported by 20-Day SMA
- Nov, 12 Euro Forms Top Following Three-Day Decline, British Pound Finds Support Ahead of 20-Day SMA
- Nov, 11 British Pound Stumbles on BoE Comments, Euro Continues to Push Towards Yearly High
- Nov, 10 British Pound Halts Five-Day Rally as Fitch Sees Risk for UK’s Credit Rating
- Nov, 09 Euro Poised to Test Yearly High, British Pound Breaks Out of Range to Hit 3-Month High
- Nov, 06 Dollar Finding Support Ahead Of Non-Farm Payrolls, Will Rising Unemployment Reverse Sentiment?
- Nov, 05 British Pound Advances as BoE Expands Asset Purchases to GBP 200B Versus GBP 225B Expected
- Nov, 04 Euro, British Pound Advances Ahead of the Federal Open Market Committee Interest Rate Decision
- Nov, 02 Euro Holds Range, British Pound Weakens on Speculation for Further Easing
- Oct, 30 British Pound Halts Four Day Rally, Euro Continues to Eye 20-Day SMA
- Oct, 28 Euro, British Pound Stumble as Investors Curb Appetite for Risk
- Oct, 29 Euro, British Pound Advance Ahead of U.S. 3Q GDP
- Oct, 27 British Pound Remains Supported by 50-Day Moving Average, Euro Continues to Hold Range
- Oct, 26 Euro Hits Fresh Yearly High, British Pound Weighed by Speculation for Further Easing
- Oct, 23 British Pound Tumbles Lower as 3Q GDP Disappoints, Euro Hits Fresh Yearly High
The euro weakened against the greenback during the overnight trade as investors scaled back their appetite for risk, and the EUR/USD may face increased selling pressures going into the North American session as the reserve currency continues to benefit from safe-haven flows.
Talking Points
• Japanese Yen: Rallies Across the Board on Risk Aversion
• Pound: Construction Spending Weakens in October
• Euro: EU Raises Growth Forecast, Sees Subdued Inflation
• US Dollar: Factory Orders on Tap
The euro weakened against the greenback during the overnight trade as investors scaled back their appetite for risk, and the EUR/USD may face increased selling pressures going into the North American session as the reserve currency continues to benefit from safe-haven flows. The EUR/USD retraced the previous day’s advance and slipped below the 50-Day SMA (1.4662) to reach a low of 1.4646, and the euro-dollar may continue to trend sideways over the next 48 hours of trading as market participants wait for the Federal Open Market Committee and European Central Bank interest rate decisions on Wednesday and Thursday.
Meanwhile, the European Union raised its growth forecast for the economy and projects GDP in the euro-region to expand at an annual pace of 0.7% in 2010 and 1.5% in 2011, but continues to see a 4.0% contraction this year. Moreover, the group expects price growth to hold at 1.1% in 2010 and 1.5% in 2011, while the budget deficit is anticipated to reach 6.9% of GDP next year. In addition, the EU continued to see a risk for a protracted recovery as the jobless rate is expected to hit 10.75% in 2011, and argued that it will be “essential to fully implement” the expansion in monetary and fiscal stimulus as the “economic situation remains highly uncertain.” At the same time, ECB board member Lorenzo Bini Smaghi said that the margin for growth and the scope to lower the deficit remains limited, and said that economic conditions remain “critical” as the global financial system remains fragile.
The British pound weakened against the U.S. dollar for the third-day and slipped to a low of 1.6270 however, as the GBP/USD remains supported by the 50-Day SMA (1.6262), we are likely to see the pair remain range-bound ahead of the Bank of England interest rate decision on Thursday as investors weigh the outlook for future policy. The economic docket for the U.K. showed construction spending fell at a faster pace in October, with the PMI reading slipping to 46.2 from 46.7 in the previous month amid expectations for a rise to 47.2. Nevertheless, the EU held an improved outlook for the economy as forecasts economic activity to expand at an annual pace of 0.9% in the following year and 1.9% in 2011, but expects housing demands “to remain depressed” as the labor market deteriorates. At the same time, Chancellor of the Exchequer, Alistair Darling, said economic conditions have improved and expects the growth rate to expand around the turn of the year, but went onto say that it may take years for the government to recoup taxpayers funds used to bailout Lloyds Banking Group and Royal Bank of Scotland as financial conditions remain far from favorable.
The U.S. dollar strengthened against most of its major counterparts following the rise in risk aversion, and the reserve currency may continue to appreciate going into the North American trade as equity futures foreshadow a lower open for the U.S. market. Meanwhile, factory orders in the U.S. are expected to rise 0.8% in September after unexpectedly falling 0.8% in the previous month, while domestic vehicle sales are projected to reach an annual pace of 7.30M in October from 6.80M in the previous month. Nevertheless, the greenback is likely to face increased volatility over the next 24 hours of trading as the Federal Reserve is scheduled to hold its policy meeting on Wednesday, and comments following the rate decision are likely to move the markets as investors weigh the outlook for future policy.
Will The EUR/USD Maintain Its Rally? Join us in the Forurm
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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- British Pound Fails to Find Support at 20-Day SMA, Euro Maintains Narrow Range
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