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Euro Currency at the Whim of its Peers This Week

GBP
Nothing from the UK today (or anywhere else for that matter), so traders will look to data later in the week for any market moving potential. Manufacturing Production and the NIESR GDP estimate released on Wednesday will have to be significantly out of whack to cause much movement, but there will be more interest in Thursday’s rate announcement, where the meeting minutes are released at the same time.

 
USD
A US holiday today will see reduced liquidity this afternoon so some good opportunities for volatility, although it will be mechanically and sentiment-led in the absence of any data from any major economies all day. A research note from UBS compares recent wild swings in equity indexes to those experienced at the top of the bubbles seen in 2000 and 2007/2008 just before the crashes that immediately followed. Whilst not predictive of a crash, they point out that just because stocks temporarily rebound, it doesn’t mean we aren’t on the precipice of a drastic fall in asset prices. Friday’s headline jobs figure missed expectations by a considerable margin and stocks reacted badly – on balance however the report wasn’t as bad as the headline figure suggested – unemployment was down and average earnings were up, both metrics we know the Fed are looking at as part of their decision making process in assessing rate hike timings. China and a persistent low inflation rate will be making FOMC voting members think twice about rate hikes, but whatever the outcome the FOMC rate announcement will be cause for volatility.

 
EUR
There’s a new political risk rearing its head in Europe in the form of a swing to the far right after reactionary support wanes for leftist socialism. The current influx of asylum seekers which the media have made their cause de jour for the moment is increasing support for parties with a decidedly increased leaning to the right, such as Marie Le Pen’s French National Front. Whether this translates into much of a market impact remains to be seen, but it’s not too much of a stretch to see how this sea change can lead to some increased anti-EU sentiment, which would weigh on the euro. Speaking of the euro, there’s no data of any note at all for this whole week, so expect it to be at the whim of its most actively traded counterparts, which may not be good news for the single currency after ending last week on a negative tone following Draghi’s dovish ECB press conference.

 

UK HEADLINES
Telegraph – Growth forecast for UK manufacturing sector slashed.
Independent – Beards to blame for falling male skin care sales.
FT – UK businesses told to ‘shut up’ over Brexit poll.

 

UK Pound Sterling, US Dollar and EUR single currency commentary provided by Argentex