Sterling Finds Volatility Despite Session Void of News
Despite there being little news and a light economic calendar during today’s European session, currency markets have produced a surprising amount of volatility to finish a quiet summer week. It’s unclear what sent Sterling on a 25 point decline against US Dollar to 1.5700, then back up to 1.5725, and then back again to 1.5700; Euro also saw similar moves against the US Dollar in the range above 1.2350.
Technically, GBPUSD has been trading close to the top of a two week channel all week long, originally finding resistance at 1.5700, but now finding support above the figure. Today, the pair seems to be stuck between the upper channel and the 1.5700 support.
The major news that could be providing excitement to the markets was Chancellor Merkel’s comments in Canada yesterday, in which she said that ECB plans are in line with Germany, as long as conditionality is maintained. She further implied approval for the ECB plan to buy struggling nations’ sovereign debt. Therefore, as Europeans return from their August vacations, the markets could be anticipating a move by the ECB.
In today’s session, there was little news out of Europe. German producer prices were unchanged in July, lower than expectations for a 0.3% rise in prices. Spain’s bad loans ratio was the highest on record in June, reported at 9.42%. Neither of these stories had significant impact on markets.
Looking towards the North American session, traders should be aware of the Canadian consumer price index for July and the US University of Michigan confidence for August.
GBPUSD 1-hour: August 17, 2012
--- Written by Benjamin Spier, DailyFX Research
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