The euro has opened slightly stronger and is close to its highest this month against the US dollar ahead of this morning’s German ZEW data that may revive hopes about the euro zone’s economic recovery, and dampen talk of further European Central Bank policy action. The US dollar remains weaker against sterling with yesterday’s mixed comments from Federal Reserve speakers keeping the US currency bouncing in and around key technical support and resistance levels.
Tomorrow’s Federal Reserve meeting minutes could hold the key that may just unlock recent trading ranges. Any new information on the Fed’s taper debate could open up trading with an injection of volatility and there is a possibility of early moves ahead of the tomorrow’s minutes following today’s heavy line up of speakers. The US Treasury Secretary, Federal Reserve Chairman Ben Bernanke and US President Barack Obama are all expected to comment on the US economy today and their remarks may just encourage more concrete bets either in favour or against the greenback.
In anticipation of renewed currency market volatility, corporates and SME’s ramped up FX trading activity yesterday with British importers taking advantage of the pound’s latest upswing against both the US dollar and euro while exporters renewed protection strategies. However, runs for various currencies have continuously been stretched and snapped this year and the pound’s latest press higher could easily unravel this week.
