Can Pound continue its winning streak against Euro and Dollar?
With no data releases worthy of a mention on Friday, the Pound was at the mercy of the markets and data from other nations dictated price action. As a result, Sterling traded firmer versus the Euro following the sharp losses on Thursday. However, this doesn’t come as a surprise as the general consensus is that Sterling will continue to appreciate versus the bloc currency. In a similar fashion, after a rather boring start to Friday, the Pound closed the week by cruising through what has proven to be a key level of resistance versus the Dollar. This came as a direct result of some key data from the US disappointing market participants.
This week starts quietly in terms of data from the UK and most expect it to be business as usual as Sterling continues its ascent versus the Euro. Against the Dollar, it is slightly more difficult for it to find a direction. The longer term outlook still points to Dollar strength. However, it would seem that traders are taking every opportunity to find value on negative US data.
The economic calendar was packed full of data from various corners of the Eurozone on Friday. The overall picture painted was largely negative. However, German GDP was in-line with analysts’ best forecasts showing a quarterly decline whilst both annual readings published showed growth. Elsewhere, we discovered that the Italian economy, despite the fact that it showed growth, missed the consensus figures. This proves that there is further disparity between the expectations of the Office of National Statistics and the true value of the recovery in the Eurozone nations.
The most important figures released from Europe came via overall Eurozone GDP, which was the largest contributor to Euro losses on Friday. The figure, forecast at 1.7% annually, was released at 1.6%, whilst quarterly growth reached 0.3% versus a 0.4% consensus. Both figures show growth, however, it would seem that market participants are anticipating the much talked about deposit rate cut in December, along with the potential for a quantitative easing extension.
Today we have potential for Euro price movement with the release of inflation figures this morning from the Eurozone. European Central Bank (ECB) President, Mario Draghi, is due to speak following the releases which has the potential to stem any losses, depending on the outcome of the numbers themselves.
By and large, Friday was a disappointing day for the Dollar following the losses it took versus Sterling. Against the Euro, the pair is lacking in any real direction and has been boring to watch. Especially given that there are calls for parity in the coming months. From a macroeconomic standpoint, the results on Friday won’t have necessarily put Dollar bulls off of having confidence in the Greenback, although they didn’t get the upbeat end to the week that they would have liked. US retail sales reported a measly growth of 0.1% for the month of October, this was versus a consensus of 0.3%. Including the sale of automobiles, the figure released only showed 0.2% growth. However, this is better than the previous number of -0.4%.
Those out there who are backing the Dollar and feel strongly that we are due an interest rate rise in December could well be growing a little restless with the lack of concrete signs from the FED on whether or not it is due to go ahead. The hints have been there and a number of investment banks are stating that the probability is very high. Most feel that this will be priced in over the coming weeks, thus resulting in the recent losses versus Sterling being erased.
We do not have any discernible data from the US today.