Market Review: Daily Forex Review

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Market Review:

Daily Forex Review

In the daily market review with TheLFB trade team, Dan Cook, Snr Market Analyst at IG Markets, looks at the impact of overnight trade on euro, cable, and cad. Catch Dan, and TheLFB trade team on ForexTV Live.

EUR\/USD – The Euro was pretty smashed up versus the Dollar as trading got underway in the Eurozone. German institutional investors  seemed to have lost a little bit of the optimism surrounding a quick recovery for both Germany and the broader Eurozone as the German ZEW Economic Sentiment reading dropped to 47.2 from 50.4 and the ZEW Sentiment for all of Europe dropped to 46.4 from 48.0. While these readings still show optimism for economic recovery, it will not be quick and these feelings were apparent by ZEW President Franz when he stated “The way out of the recession is burdensome and long."

While the Euro has found little fundamental support lately and concerns around Greek debt continue to swirl, for the time being it has found some technical support. After a rapid drop the Euro found some footing at a double bottom low with the 8th of January. It is yet to be seen if this will hold; however, previously the continental currency has enjoyed a nice bounce from this level.

GBP\/USD – After hitting another 2010 high the Pound followed suit with the Euro in a rapid drop as trading started in London. In contrast to the Eurozone however, the fundamental data out of the UK was of the kind that would typically drive a currency higher, rather than seeing it sell off. It was reported that the UK Inflation rate jumped by the most ever in December with Core CPI ballooning to 2.8% and the broader CPI measure growing by 2.9%. Both of these figures are year-over-year growth rates. 

Sterling actually mounted a quick rally on the release of this data; however, it was not long after that the sell-off began. Heading into the US trading day the GBP seems to have grabbed the reins again and has recovered about 60 of the pips lost earlier today. Later today Bank of England Governor Mervyn King is scheduled to speak at the University Business Leaders Forum. While it is unlikely that he will offer too much in the way of official policy direction, anytime Mr. King speaks, Sterling can be greatly affected.

USD\/CAD – The US Dollar and Loonie have been through a pretty volatile morning so far with neither one really gaining too much ground as we head into their respective trading sessions. Initially the US Dollar surged when the Bank of Canada released their decision to keep the Overnight Lending Rate in line with the US at 0.25%. While the BoC stated that their outlook for global growth is somewhat better than it was in October, the recovery “continues to depend on exceptional monetary policy and fiscal stimulus, as well as extraordinary measures taken to support financial systems.”

What little shock there should have been to this report has already seemed to wear off as the CAD quickly regained most of the value shed directly following this release. As we get farther into the trading the day, the US Dollar is showing a little bit of strength as the energy related commodities are showing a degree of weakness this morning.