Kantox currency update: euro, near 6-month highs with Eurozone GDP on focus
The euro has opened the week on a strong note and extended its recovery from last week lows, to regain all the ground lost over the previous week, returning above the 1.10 psychological level, ahead of the release of the Eurozone Gross Domestic Product data.
According to market sources, the euro is being buoyed by an increment of euro long positions, with the investors anticipating a change of the ECB’s forward guidance, once the political uncertainties waned after Macron’s victory in France.
EUR/USD back above 1.1000, near 6-month highs. The euro has rallied about 1.5% over the last two days, extending its recovery from last week lows at 1.0850, to levels right below 6-month high at 1.1020. At London market opening times, the EUR/USD is trading at 1.1005.
GBP/USD: hovering below 1.3000. Sterling’s retreat from 1.2990 high last week was supported at 1.2845 lows and the pair advanced on Monday, favoured by broad-based dollar weakness, to reach the mid-range of 1.2900. At London market opening times, the GBP/USD is trading at 1.2920.
USD/JPY consolidating above 113.00. Dollar reversal from multi-week highs at 114.35 last week, was contained at 113.10, and the pair attempted to bounce up on Monday, to be capped at 113.75 area. At London market opening times, the USD/JPY is trading at 113.35.
In the Calendar Today
At 08:30 GMT National Statistics will release April’s Consumer Prices Index figures. Inflation is expected to have accelerated in April, which would increase concerns about the possibility of a squeeze in consumer spending, as the Bank of England warned last week, that will dampen economic growth over the coming months. In this case, another strong increase in consumer prices could have a negative impact on the pound.
At 09:00 GMT Eurostat will release the preliminary Gross Domestic Product figures for the first quarter, which are expected to confirm the flash estimation of a 1.7% yearly growth. With political uncertainty out of the table, a steady economic growth in the euro area would add pressure to the ECB to scale back its QE program, and probably add buying pressure on the euro.
08:30 GMT UK: Consumer Prices Index (YoY) (Apr)
Prev: 2.3% Cons:2.6%
12:30 GMT EU: Gross Domestic Product (YoY) (Q1)
Prev: 1.7% Cons: 1.7%