EUR and GBP Sold Out Last Week (Weekly Review)

2018-10-22
Published last week data on consumer inflation in the UK did not meet expectations of the financial markets participants, and only added some pressure on the British pound that was sold out influenced by the UK incessant battles with the EU over the conditions of Brexit. Encouraging news aroused the appetite for buying GBP, but the lack of progress in negotiations on some controversial issues, in particular regarding the Irish border, returned sellers to the market. Thus, volatility in pairs with it remains high, and under these conditions it is better to refrain from active actions.

The Euro, like the British pound, was in a vulnerable position. Released Eurozone inflation data expectedly did not play in favor of the European Central Bank raising the interest rate, and along with the Italian government adopting a budget that increases public spending, which contradicts EU requirements, the Euro was actively sold off. By the end of the week, due to the statement of EU Commissioner Pierre Moskovich that the bloc’s authorities would not interfere in Italy’s economic policy, the Euro was able to regain some of the losses it had suffered.

Thus, the fall of the EUR against the USD was suspended by interest on buying from the level of 1.1433, and after testing this level it was able to recover to 1.1533. However, if Brussels disagrees to the budget adopted by the Italian authorities, the next financial crisis may develop, which can spread such countries as Greece, Portugal, Spain, and then the Euro will be expected to receive a new wave of large-scale sales. In the meantime, it demonstrates a positive attitude, currently breaking through the resistance around 1.1538, but the bulls should be extremely cautious, since this growth can be used for sales.

Schedule for this week:

Monday, October 22
10:00 GMT - Germany. Bundesbank Monthly Report;
12:30 GMT – USA. Chicago Fed National Activity.

Tuesday, October 23
10:30 GMT – United Kingdom. Bank of England (BoE) Monetary Policy Committee (MPC) Member Haldane Speaks;
12:55 GMT – USA.Redbook Index;
14:00 GMT – Eurozone. Consumer Confidence;
15:20 GMT - United Kingdom. Bank of England Governor Carney Speaks.

Wednesday, October 24
05:00 GMT – Japan. Leading Indicators Index;
07:30 GMT – Germany.  Markit Manufacturing Purchasing Managers Index (PMI);
07:30 GMT – Germany. Markit Composite Purchasing Managers Index (PMI);
07:30 GMT – Germany.  Markit Services Purchasing Managers Index (PMI);
08:00 GMT – Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Services Purchasing Managers Index (PMI);
08:00 GMT – Eurozone. Markit Manufacturing Purchasing Managers Index (PMI);
13:00 GMT – USA. House Price Index (MoM) (Aug);
13:45 GMT – USA. Markit Composite Purchasing Managers Index (PMI);
13:45 GMT – USA. Markit Services Purchasing Managers Index (PMI);
14:00 GMT – Canada. Bank of Canada (BOC) Interest Rate Decision;
14:00 GMT – Canada. Bank of Canada (BOC) Rate Statement;
14:00 GMT – Canada. Bank of Canada Monetary Policy Report;

14:00 GMT – USA. New Home Sales (MoM) (Sep);
15:15 GMT – Canada. BoC Press Conference.

Thursday, October 25
21:45 GMT – New Zealand. Trade Balance;
21:45 GMT - New Zealand. Import/Export;
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
23:50 GMT - Japan. Foreign Bonds Buying;
11:45 GMT – Eurozone. European Central Bank (ECB) Interest Rate Decision;
12:30 GMT – Eurozone.  European Central Bank Press Conference and Monetary Policy Report;

12:30 GMT – USA. Durable Goods Orders.

Friday, October 26
23:30 GMT – Japan. Tokyo Core Consumer Price Index (CPI), excluding fresh food;
12:30 GMT – USA. GDP Annual (Q3);
12:30 GMT – USA. GDP Price Index;
12:30 GMT – USA. Core Personal Consumption Expenditure (PCE) Prices (QoQ) (Q3);
14:00 GMT – Eurozone. European Central Bank President Draghi Speaks.

Author: Anthony Porter, IAFT Analyst

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