The week’s currency traders had an emphasis on the USDJPY as it climbed to 110.09 – the highest since August 2008. Surprisingly, the hit came during the Asian session. Taking into account the fact that in a week full of jobs data out of the United States (both private and non-farm payrolls to be released this week), the pair is traveling mostly in the North American session rather than in the Asian one.
EURUSD sellers came to the surface once again sending the pair below 1.26. They had plenty of reasons for doing that: on one hand, the CPI (Consumer Price Index) saw lower inflation than expected yet again. On the other hand, the PMI’s (Purchasing Managers Index) figures released today were softer than expected. Even Germany dipped below the 50 levels, pointing to recessionary conditions.
The PMI release offers a glimpse into the real economy, with market participants having an early idea if a sector is contracting or expanding. The aim is to guess what the European Central Bank will do at the next meeting on Thursday the 2nd of October.
The CPI suffered an embarrassing setback as it was revised to a higher figure a couple of hours after its initial release. Eurostat blamed a calculation error as the cause for the amendment, however, the USDEUR did not recover the initial 100 pip loss, and traders were stuck with the 1.26 level.
Moving forward into the week, all eyes will be on the European Central Bank and Draghi for tomorrow’s monthly press conference. This has two main elements: first is the central bank statement, the second is the Q&A with press representatives.
The second half is always the most “juicy” one for traders and markets can go wild on nothing at all. Strong moves may even downplay the initial reaction when interest rates were announced.
It remains to be seen if markets will jump around Draghi’s speech. If not, then the NFP (non-farm payrolls) on Friday will do the trick.
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Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
