The up down cycle of Euro trading, has jolted as news of the upcoming Irish election and consequent banking uncertainty casts a lingering shadow over the Euro Zone. Many took the opportunity to sell the Euro today as the minority Irish Green Party retracted it support for the Government. The Irish government is now attempting to speed up economic moves in order to push through an earlier vote to pass the government budget before wider revolt is spread. It is crucial that Ireland votes to pass the budget in order to receive the IMF bailout. This latest hurdle aside, general sentiment towards the Euro seems to be one of optimism. Stable fundamentals within Europe, outside of political machinations remain confident. PMI manufacturing has met expectations at 56.9. Euro Zone industrial orders have exceeded expectations with orders for November reaching 2.1%.
The Euro’s direct relationship with the dollar is likely to be focusing closely on the following data this week: US consumer confidence results, Richmond Fed manufacturing, S&P/Case Shiller home prices and US weekly jobless claims later this week. The US dollar pairing with Sterling looks set to experience some turbulence as traders begin to breakdown growing speculation surrounding Bank of England interest rate decisions. Sterling dropped to a new low of $1.5922 against the Greenback, amid interest rate speculation. The highly anticipated release of the UK fourth quarter GDP figures will shine some light on the UK economy and whether interest rate intervention is a necessary factor.
The Aussie dollar has been trading higher against the dollar but this pattern looks set to fluctuate with the onslaught of Australian inflationary data. Economists predict an increase to 3%, from the previous 2.8%. With no upcoming market data releases this week, it’s likely that the Aussie dollar will be driven by the flow of equity sentiment and commodity prices. Meanwhile Australian ties to the Chinese export industry will be the knock on focus of trading attention as the Forex markets monitor the release of Japanese unemployment figures, CPI and household spending.
