Posted on February 11, 2015 by the XM Investment Research Desk at 3:24 pm GMT
Economic data releases were almost nonexistent today leaving the focus still on Greece. As a result, the euro was range-bound above 1.1300 for most of the European session while the dollar was broadly stronger. Towards the end of the session it dipped to 1.1288. The downside bias remains strong and the currency is merely waiting for a catalyst for a move lower. The core driver will likely be any negative news headlines out of the Eurogroup finance ministers meeting on Greece on today. The country is pushing for more lenient bailout terms but there does not seem to be a solution in sight and time and money is running out. The current bailout agreement expires at the end of February.
Sterling was strong today, outperforming all the majors during the European session, rising to a high of 1.5298 before easing back down. Helping boost the pound was the sell-off in EURGBP which fell to fresh 7-year lows of 0.7384. The main near-term risk for the British currency is tomorrow’s Bank of England Inflation Report. If the Bank’s Governor Mark Carney signals that an increase in the benchmark interest rate isn’t as far off as some investors expect, this would help boost the pound.
The yen was broadly weaker today as there was a lack of concern from the G20 on the currency’s depreciation. As a result, the dollar extended gains versus the yen and broke above the key 120.00 yen level to as high as 120.30 by early US session trading. The dollar/yen pair was already on a path higher from Tuesday following comments from Federal Reserve speakers who indicated that Fed rate hikes are closer. Richmond Fed President Jeff Lacker put forth his view of the Fed tightening as early as June.
The Australian dollar fell towards the key 0.7700 level. The core risk for the aussie will be tomorrow’s domestic employment report.