The pair can’t seem to close above supply between 0.9330 and 0.9350; although the pair tested the 94 handle yesterday, traders sold into the move. At 11:30 today we get the RBA minutes and new motor vehicle sales. The minutes will obviously be the key event with traders seeing the actual statement released back on September 3 as neutral. The fact the RBA left out ‘scope to ease’ was widely discussed on the floor, and traders will be keen to look out for more information on what could cause the bank to cut in the future.
Cable traded to a high of 1.5963 yesterday on USD weakness caused by Larry Summers stepping out of the race for the Fed chairman role. In UK trade at 18:30 we get the latest inflation read and the market expects a gain of 2.7% on the year, although core inflation is more manageable at +2.1%. A strong number here could push cable through 1.60.
At 19:00 we get the latest ZEW confidence read and once again this survey is expected to improve. Good numbers here could support EUR/USD as well, despite Mario Draghi continuing to stay relatively cautious.
After hitting a high of $1336 yesterday, the pair fell back to $1303 as commodity traders felt that regardless of who was a helm of the Fed it wouldn’t alter Fed policy too much. We highlighted gold again in our ‘one to watch’ and feel the metal can trade down to $1277 in the short to medium term.
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