The EUR/USD opened at a 2 year low at the beginning of last week after very strong Non-farm Payrolls data. The positive data increased speculation that U.S. interest rates could be increased sooner. Consequently, the market awaited the FOMC Meeting Minutes on Wednesday, expecting more positive news. However, the Federal Reserve was dovish and did not provide any hints of a potential hike in rates. Following this, the pair rose 300 pips in just four days, almost climbing to 1.28.
We expect lower volatility at the beginning of this week as the U.S. and Canadian markets will remain closed for a Bank Holiday. On Tuesday, the German ZEW Economic Sentiment will be released and is predicted to show the lowest value since November 2012. This should create great trading opportunities as it will put additional pressure on the Euro and most likely cause a drop in the pair. On Wednesday, Mario Draghi will be speaking at the 7th Statistics Conference organized by the European Central Bank. U.S. Retail Sales will also be released so we could see high volatility. Finally, on Thursday, EU inflation data and could add downward pressure on the pair.
The GBP/USD has been trading in the same pattern as the EUR/USD. By Thursday, the pair had added around 275 pips but once it reached 1.6225 it reversed. At the end of the week there was a downwards price correction to where the pair is currently trading at 1.6115.
This week, traders should keep an eye on the UK CPI data which will be released on Tuesday. Contrastingly to the EU, the UK does not face the pressure of low inflation and so we expect the figure to be 1.4%. On Wednesday volatility should increase due to data from both the UK and U.S. Two pieces of labour data will be released from the UK; the Claimant Count Change and the Unemployment rate and Retail Sales and PPI data will be released from the U.S. On Friday, Janet Yellen will be speaking at the Federal Reserve Bank of Boston’s Conference.
Gold dropped to $1,182/ounce but then recovered to $1,230/ounce. At first, gains were seen as physical demand increased and the Dollar weakened due to a price correction. However, at the end of the week the price increased following a decision by the International Monetary Fund to downgrade the global outlook for 2015. They also stated that the level of growth seen during pre -crisis levels may never be reached again and this statement pushed stocks sharply lower. Consequently, the S&P 500 fell below 1,900, trading at its lowest level since April and the FTSE dropped to a one year low.
As there is now a negative mood on the market we should expect demand for the safe haven asset to stay high and therefore, gold should maintain its gains. This week we should pay attention to U.S. data and to speeches from FOMC members including Charles Plosser who will be speaking on Thursday.
October 13, 2014 – Weekly News
EUR/USD
The EUR/USD opened at a 2 year low at the beginning of last week after very strong Non-farm Payrolls data. The positive data increased speculation that U.S. interest rates could be increased sooner. Consequently, the market awaited the FOMC Meeting Minutes on Wednesday, expecting more positive news. However, the Federal Reserve was dovish and did not provide any hints of a potential hike in rates. Following this, the pair rose 300 pips in just four days, almost climbing to 1.28.
We expect lower volatility at the beginning of this week as the U.S. and Canadian markets will remain closed for a Bank Holiday. On Tuesday, the German ZEW Economic Sentiment will be released and is predicted to show the lowest value since November 2012. This should create great trading opportunities as it will put additional pressure on the Euro and most likely cause a drop in the pair. On Wednesday, Mario Draghi will be speaking at the 7th Statistics Conference organized by the European Central Bank. U.S. Retail Sales will also be released so we could see high volatility. Finally, on Thursday, EU inflation data and could add downward pressure on the pair.
GBP/USD
The GBP/USD has been trading in the same pattern as the EUR/USD. By Thursday, the pair had added around 275 pips but once it reached 1.6225 it reversed. At the end of the week there was a downwards price correction to where the pair is currently trading at 1.6115.
This week, traders should keep an eye on the UK CPI data which will be released on Tuesday. Contrastingly to the EU, the UK does not face the pressure of low inflation and so we expect the figure to be 1.4%. On Wednesday volatility should increase due to data from both the UK and U.S. Two pieces of labour data will be released from the UK; the Claimant Count Change and the Unemployment rate and Retail Sales and PPI data will be released from the U.S. On Friday, Janet Yellen will be speaking at the Federal Reserve Bank of Boston’s Conference.
GOLD
Gold dropped to $1,182/ounce but then recovered to $1,230/ounce. At first, gains were seen as physical demand increased and the Dollar weakened due to a price correction. However, at the end of the week the price increased following a decision by the International Monetary Fund to downgrade the global outlook for 2015. They also stated that the level of growth seen during pre -crisis levels may never be reached again and this statement pushed stocks sharply lower. Consequently, the S&P 500 fell below 1,900, trading at its lowest level since April and the FTSE dropped to a one year low.
As there is now a negative mood on the market we should expect demand for the safe haven asset to stay high and therefore, gold should maintain its gains. This week we should pay attention to U.S. data and to speeches from FOMC members including Charles Plosser who will be speaking on Thursday.
Economics events (GMT time):
13/10/2014
14/10/2014
15/10/2014
16/10/2014
17/10/2014
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