Currency Feed – Monday 18th September

Eurozone inflation back in focus Eurozone inflation data is marked for release today at 10:00. Expectations are for prices to have risen by 0.3% month on month and 1.5% on an annualised basis. The Euro is like to gain against other currencies should prices have risen by a faster pace than expected as the odds […]

18th September 2017 | Miles Eakers

Eurozone inflation back in focus

Eurozone inflation data is marked for release today at 10:00. Expectations are for prices to have risen by 0.3% month on month and 1.5% on an annualised basis. The Euro is like to gain against other currencies should prices have risen by a faster pace than expected as the odds of tapering by the ECB increase.

Last week led to a sizable gain for the Pound against both the dollar and the Euro. This followed hawkish comments last Thursday from the Bank of England, hinting at a rate hike in the coming months. Later today Mark Carney is scheduled to deliver a speech at 16:00 and any comments around tightening of monetary policy could see further strength in the Pound.

A word of caution around the Pound must be taken, as political uncertainty could see Brexit negotiations collapse. The Foreign secretary, Boris Johnson, released an article this weekend that some have interpreted as a power play for the Tory leadership. The current Prime minister faces a tricky week with her biggest Brexit speech in 8 months in Florence this Friday.

The main event this week remains the Federal Reserve meeting. Expectations are for the Fed to announce plans to begin shrinking its balance sheet in a step towards normalisation of monetary policy. Expectations are now for there to be no more interest rate rises later this year from the Fed, despite expectations and comments to suggest 4 occurring this year.

In equity markets, the S&P set another record close on Friday, closing above the 2,500 level. European equity markets are expected to follow suit with the FTSE also up 0.5% and the DAX up 0.6%. Oil is up 0.1% to $55.68 after touching a five-month high of $55.85 on Friday. While Gold is down 0.3% to $1,315.11 after slipping 0.8% in the previous session.

EUR/USD $1.1941 (-$0.0003)

EUR/USD opened in Asia at $1.1931 around midway of Friday’s range. We began the session on the back foot, falling to today’s low of $1.1918. The pair found support as the session wore on, rising to today’s high of $1.1955. The pair have eased off the highs as we approach the European open, trading at $1.1941. From a technical view, Thursday’s low at $1.1836 and the August 31st low at $1.1821 may offer support while on the upside Friday’s high at $1.1960 and Wednesday’s high at $1.1994 are in focus.

GBP/USD $1.3588 (-$0.0003) 

Cable opened in Asia at $1.3579 towards the upper end of Friday’s range. We began the session on the back foot, dropping to today’s low of $1.3551. The pair found some support as the session wore on, rising to today’s high of $1.3603. The pair have eased off the highs as we approach the European open, with the pair trading at $1.3588. Above Friday’s high, we look for resistance at the February 29th (2016) low of $1.3833 followed by the April 4th (2016)/June 16th (2016) lows at $1.4004/10. On the downside, the Friday’s overnight low at $1.3379 may offer some support before Wednesday’s high at $1.3328.

 
USD/JPY ¥111.15 (+¥0.31)

USD/JPY opened in Asia at ¥110.87, the low of the session and towards the upper end of Friday’s range as North Korean fears recede once again. The pair have continued to set fresh highs throughout the session, trading in a narrow range as Japanese markets were closed for Respect the Aged Day. USD/JPY set a high of ¥111.25 as the session wore on. The market has eased off the highs as we approach the European open, trading at ¥111.15. Above today’s high, we look for resistance at the July 28th high of ¥111.33 and July 27th high of ¥111.70. On the downside, the Friday’s low at ¥109.54 and Tuesday’s low at ¥109.23 are in focus.

GBP/EUR €1.1373 (-€0.0003)

GBP/EUR opened in Asia at €1.1360 towards the upper end of Friday’s range. We began the session on the back foot, falling to today’s low of €1.1344. The pair have found some support as the session wore, rising to today’s high of €1.1383. The pair has eased away from the highs as we approach the European open, trading at €1.1373. From a technical view, we look for resistance at the July 14th high of €1.1436 and June 16th high at €1.1466. On the downside, the overnight low at €1.1223 and Tuesday’s/Wednesday’s highs at €1.1131 are in focus.

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