THE TIPSTER
AFTER Jean-Claude Trichet suggested the euro was overvalued, euro-dollar stalled yesterday. The euro remains sensitive to Greek debt issues, and the periphery of Europe remains in the spotlight. It is unlikely in the near team euro-dollar will make an attempt on the $1.49 May high. Traders should begin selling into euro strength for a medium term correction. FairFX quotes euro-dollar at $1.4668-$1.4670.
Sterling is falling and is facing eight consecutive poor trading days against the euro. With concerns that the austerity drive isn’t pushing growth as much as we would like, this could mean rates stick where they are for some time. Poor UK retail sales figures earlier this week haven’t helped the pound’s cause, and with traders buying into gilts, this could signal worse to come for sterling. Capital Spreads quotes sterling-euro at €1.4670-€1.4671.
Ongoing concerns over the risks to the global economy as a whole and perhaps more specifically the state of the deficit in the US are continuing to push dollar-Swiss franc to fresh record lows. The pair has been trading below parity for just over six months now, but with the world’s largest economy still struggling to gain traction, there’s no reason to believe we’ll see a reversion any time soon. Current IG Index price for dollar-Swiss franc is SFr0.8333-SFr0.8335.
The flurry of interest rate policy decisions from no less than nine central banks has raised event risk significantly for this week. The ECB is in prime focus as expectations for hikes gather momentum. All board members have been telegraphing hawkish views but tightening into a stressed periphery seems an obvious policy mistake. The Aussie dollar has its own fair share of news flow and it seems to be a little more positive than that of the euro. Reports from Australia over the next couple of days are expected to show gains in home loans and employment. Add this to the ECB decision and press conference and the result should be a busy couple of days for the pair. On euro-Australian dollar, Alpari UK offers a spread of Au$1.3702-Au$1.3703.