RedFX Update: Big week for the EURO and USD
Stay tuned to the upcome week as anotheer round of speeches might impact the markets once again.
GBP: Sterling is set for another quiet week with little economic data being released. With this lack of information, GBP is on thin ground and any GBP/EUR movement will be driven by the common currency, similar to last week. UK PMI could prompt some volatility if it differs from initial estimates. The pound has opened this morning slightly lower against both USD and EUR but is likely to see an increase in volatility on both Wednesday & Thursday.
GBP/EUR around 1.1375 and GBP/USD around 1.2500 - both were trading slightly higher last week and in yesterday's holiday trading hours.
EUR: The Euro is likely to see an increase in trading volatility this week, with multiple economic data releases planned, as well as the European Central Bank delivering its next interest rate decision. The market expects the ECB to raise rates by 25-basis points but will focus on the ECB’s forward guidance.
Economists also expect Euro Zone inflation to hold steady, above ECB targets, which could result in a stronger Euro. The Euro has started the trading session stronger against both GBP & USD.
EUR/USD at 1.1000 trading cautiously
USD: The Dollar is also expected to see increased volatility early this week, as both US Employment numbers & the FED’s Interest rate decision are planned to be announced tomorrow. Whilst the market has already priced in the possible 25bps rate hike, investors will keep a keen interest in Jerome Powell’s speech as he touches on the FED’s roadmap for tackling US Consumer Price Index.
As economists clash over their expectations of a possible recession in the US, this rate-meeting will be seen as the pivotal moment in Fed policy decisions and as such pivotal for the USD. We have seen many customers pre-hedging and reducing risk exposures in the lead up to this week.approach.
