This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The market has had a surprisingly muted reaction to the European Central Bank cutting interest rates last week. It is possible that traders are keeping their powder dry ahead of a raft of quarterly GDP figures from European countries, as well as the Eurogroup meeting and the ECB monthly bulletin on Thursday.
Another issue creating caution may be the US and the strength of its economy, as the debate regarding what the Federal Reserve will do in terms of its bond buying plans continues. Earlier in the year the general consensus was for the $85 billion a month they currently spend to be reduced; however, as no progress has yet been made this year with the debt ceiling or the budget, this possibility is looking considerably less likely. With Ben Bernanke stepping down in 2014 and Janet Yellen taking over, this leaves much uncertainty as to how the Fed policies will shape up in coming months.
IG client accounts still indicate a belief that there is further for EUR/USD to fall, as they are 74% short.