Forex Insight For The Week
INTERNATIONAL CURRENCY BUZZ
Forex - U.S. Dollar Set to End Week on Strong Note Forex - GBP/USD weakness persists, close to 1.4000 Forex - EUR/USD fall significantly during Friday session
The EUR/USD is trading at around 1.2275 down 0.58% on Friday’s trading as the European forex session is slowly coming to an end. The spot just saw profit taking in the 1.2250 region with a 30-pip rebound but the momentum remains tilted to the downside. One side finally capitulated in what was a tug of war in the last 3 days where the single currency traded in a tight range between the 1.2350 and 1.2400 level. It was a crowded trade to the upside and the bears finally took the lead and broke through the 1.2350 support in Friday’s European session. The euro negative sentiment is exacerbated by recent disappointing data on Wednesday with lower inflation in the Eurozone and speculation of a dovish ECB next week. Meanwhile, the greenback is on a tear, the US Dollar Index (DXY) spiked almost 0.60% on Friday, jumping from the 89.90 level to 90.40, smashing through the 90.00 mark with strong momentum.
The GBP/USD is trading at around 1.4028 down 0.42% on Friday. The GBP is under great pressure as market participants wonder if a rate hike is indeed coming in May. The latest macroeconomic data on inflation and retail sales were a miss and recent dovish comments from Mark Carney, Bank of England (BoE) Governor, exacerbated the bearish momentum on the Sterling. Additionally, Michael Saunders from Bank of England -who is hawk- made some dovish comments “the UK rates probably need to move over time to something more neutral, but not too quickly.” which adds pressure to the British pound which is trading close to the 1.4000 handle. On Thursday Carney said that the uncertainties related to the Brexit could delay rate hikes.The news was perceived as extremely bearish for the pound which dropped 150 pips on the news to 1.4070 back then. Exacerbating the GBP/USD weakness is the strong US dollar which got a boost from US bond yields.