Trades in Europe started with a growth on the dollar. The pound/dollar continued yesterday’s rise after a roll back to 1.5805. The pound gained 124 points to 1.5929. At the moment of writing this review it was trading at 1.5914. There’s no real reason for the strengthening of the pound since retail sales results in the UK came out as contradictory.
The bear set-up on the dollar remains after yesterday’s FOMC meeting. The federal Reserve system reassessed their GDP forecast down for 2015, leading the market to believe that any rate rise will be gradual.
Additional support for the pound came from a fall in the euro/pound cross due to the Greek problem. The pound has become something of a safe haven through this cross. But maybe not. Whilst the Grexit is still up in the air, investors are having a preference to hold long positions on the pound over those on the euro.
The euro/dollar has risen to 1.1419 on the back of the weakening dollar. According to the latest data, it’s at 1.1392. The euro/dollar has returned to the MA channel after straying off the radar on the hourly. The pair was outside the channel for no more than an hour. The market is rocking, but there’s no reason for growth on the euro.
The European stock indices are trading in the red zone as the European finance ministers are preparing to convene. In Luxemburg. The meeting will be fully centered around Greece. The yield on German 10-year bonds has fallen by 7.8% to 0.748%. As I see it, the euro/dollar pair is undergoing a correctional movement towards 1.1320 and the pound/dollar is heading for 1.5850.
At 15:30 the US will release data on initial unemployment benefit applications, the trade balance for Q1 and the May CPI. At 14:00 EET the Philadelphia Fed will release its manufacturing index for June.