Daily Currency report

From Peter-John Theuninck, Currency Analyst at Baydonhillfx

The medal tally for Team GB keeps ticking up although a number of painfully close results have left many a bit disappointed as divers Tom Daley and Pete Waterfield claims fourth in the men’s synchronised 10m platform diving and Britain’s swimmer fell just outside the medal rankings. The disappointment being felt by many over the near miss results was tempered by the joy seen as Britain’s men’s gymnastics team won Bronze and these emotions closely reflected investor sentiment and the trends seen in the currency markets as well.

The market focused on the European Central Bank meeting on Thursday as speculation of increased monetary easing to support the heavily indebted Euro-zone economies gave little hope to investors. Italy’s bond auction offered good results as the full allotment of treasuries was taken up and yield on the 10-yr bonds was very little fluctuations, pushing the single currency higher despite weaker consumer and business sentiment figures being released.

Traders closed their trading day covering Euro short positions ahead of the highly anticipated ECB easing action and today will likely seen similar trends although it is unlikely that the Euro will break out of its recent ranges. Better than expected German retail sales data has already lifted the Euro this morning and unemployment figures for Europe’s largest economy will be released later today. Neither of these events will be a game changer today as we continue to wait for the EU central bank meeting.

The Pound had little to do but follow the market as no-one is expecting any monetary policy changes for the Bank of England this week and are thus focusing on the European Central Bank and the US Federal Reserve Bank who are both expected to offer some form of monetary easing or stimulus packages. The lower growth data from last week is still putting a bit of pressure on the Pound ahead of tomorrow’s manufacturing activity indices being released tomorrow.

US weekly retail sales data and the Chicago PMI index is being released today with the US Fed policy announcement on Wednesday evening, Canada will issues its May GDP figures which is not expected to give the Canadian Dollar a significant amount of support. There is no data from the United Kingdom scheduled for today.