Sterling to steal the show today

<p>The FX markets remain in consolidation mode as equities and risk hold on to gains made last week, with the S&P teasing the 1850 level […]</p>

The FX markets remain in consolidation mode as equities and risk hold on to gains made last week, with the S&P teasing the 1850 level whilst the dollar index looks at the December low of 79.60.

News and events have been limited overnight; although US Treasury Secretary Jack Lew added to comments from Australia and Canada that the US was monitoring ‘considerable volatility’ in global markets. He suggested that discussions at this weekend’s G20 Summit in Sydney could centre around the recent emerging markets turmoil.

I expect the proud pound to take centre stage again today with the release of the BoE minutes and unemployment data.

The weaker CPI reading yesterday has fuelled ideas for a stronger retail sales  number on Friday, following a theme we saw last month that weaker discounted prices lead to increased sales.

I think the quarterly inflation report last week has given us all we need to know from the BoE on threshold mandates, so today I look for further discussion on what the Governor seemed to be drumming into us last week – ‘spare capacity’.

The unemployment rate will be keenly watched to ascertain whether we do indeed hit the magic 7% level.

I suspect that UK data, like the US, is going to be in a phase of weather distortion as I certainly can’t remember the last time it wasn’t raining.

In the US session today we see the latest PPI data at 13.30, along with comments from Fed speakers Lockhart and Bullard over the afternoon.

Then, tonight at 19.00 we get the FOMC minutes for the latest snapshot on the Federal Reserve’s thinking. The theme is likely to remain for the speed of taper as the FOMC stay unmoved by recent weather related data.

 

EUR/USD

Supports 1.3715-1.3685-1.3660 | Resistance 1.3785-1.3800-1.3830

 

USD/JPY

Supports 102.00-100.40-100.85 | Resistance 102.80-103.15-103.55

 



GBP/USD

Supports  1.6650-1.6600-1.6550 | Resistance 1.6745-1.6820-1.6880

 

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.